Why is Nissan cutting 12,500 jobs worldwide?

[Dan Smith]

[Sam Rondon]

Nissan (TYO:7201) plans to cut 12,500 jobs worldwide, twice the number the company had previously announced. This move will lower the production capacity and the number of produced vehicles by 10%.

The Japanese carmaker is making this move in response to declining sales. Earlier this year, Nissan announced 4,800 job cuts, which eventually increased to 12,500. Union sources said they’re hoping that the company’s Sunderland car plant will avoid the cuts.

Nissan announced a Q1 net profit drop of 94.5% today, one of the company’s worst quarters in 10 years. The carmaker is having a hard time in the US, one of its largest markets, trying to keep up with its peers.

It is expected that Nissan will cut jobs mostly in factories in South America and other regions where the company’s profitability is lower, while its Sunderland plant, the largest car factory in the UK, appears safe for now.