Jaguar Land Rover (JLR) will cut production and not renew the contracts of around 1,000 temporary workers at its Solihull plant, ITV News understands.
The UK's biggest carmaker confirmed it is making adjustments due to "continuing headwinds impacting the car industry".
It will announce its plans for 2018/19 to its workforce on Monday.
New car sales fell by 5.7% in the UK last year amid falling business and consumer confidence.
JLR said in a statement: "In light of the continuing headwinds impacting the car industry, we are making some adjustments to our production schedules and the level of agency staff."
It commented that although many jobs are being cut, "large numbers of highly skilled engineers, graduates and apprentices" are being hired.
It added: "We also remain committed to our UK plants in which we have invested more than £4 billion since 2010 to future proof manufacturing technologies to deliver new models."
Jaguar Land Rover exports 80% of cars produced in the UK, to over 136 markets worldwide.
The automotive industry has warned of the impact of Brexit and a fall in demand for diesel cars amid concern over emissions.
Demand for diesel cars fell by 17% in 2017 and their popularity is expected to fall further in 2018 after Chancellor Philip Hammond announced a tax hike on new diesels in his Autumn budget.
The Government has also unveiled plans to ban the sale of all conventional diesel and petrol cars by 2040 as the industry aims to be more environment friendly.