Nissan, Japan's second-largest car manufacturer, expects to make a loss of up to Y20bn ( pounds 81m) in the year to 31 March. This compares with earlier forecasts of a Y40bn profit and an actual profit of Y87.76bn last year.
A spokesman for Nissan in Britain stressed the job losses would be sustained by the parent company and would not affect the UK operations. The company, which has a manufacturing site in Sunderland, employs 4,000 in Britain.
Nissan made no official change of its forecast for worldwide group net profit this year. But it said that a downward revision was inevitable. In May, Nissan had forecast group net profit of Y50bn in 1992-93, down from Y101.30bn last year.
Nissan's plight underlines the problems in the Japanese car industry, where the recession hit domestic sales later than in other large markets. Chiyoko Sato, a Nissan spokeswoman, said that conditions were more severe than previously expected, both at home and abroad. She said that a quick recovery was unlikely.
Ms Sato said the reduction of workers would be made mainly through attrition, limits on new hiring and transfers of workers to subsidiaries and affiliated companies.
Nissan also lowered its forecast of parent sales to Y4,100bn this year from a May forecast of Y4,300bn. The annual dividend is likely to be halved to Y7 for the current year.
Earlier this week, Toyota, Japan's largest car maker, reported a 40 per cent drop in worldwide pre-tax profits to Y427.9bn last year because of stalled sales in Japan and abroad.
It was the second year in a row that Toyota had reported a large profit decline and the group said that there would be no significant upturn in 1992-93.
Japan's economic problems were also reflected by downward revisions in profit forecasts by Toshiba and NEC, two of the biggest electrical groups.
The companies blamed the failure of Japan's computer and electronics markets to pick up as expected.
Toshiba lowered its parent net profit forecast for the year to 31 March 1993 to Y34bn from its May forecast of Y43bn. It made a net profit of Y42.43bn the previous year.
A spokesman for NEC said the company expected group pre-tax profits to fall to Y35bn in 1992-93 from Y51.45bn the year before.