Deutsche Securities has slashed its forecast for Toyota Motor’s operating profit by 84% for the next business year, reflecting the impact of the earthquake and tsunami that has brought Japanese car production almost to a standstill.

The disaster damaged assembly and parts factories in the north eastern region of Japan, causing industry wide production losses of at least 400,000 vehicles in the country. There is expected to be a further ripple effect out to overseas production and non-Japanese carmakers as parts inventories dry up.

Deutsche said it now expects Toyota’s operating profit for the business year starting on April 1 to be JPY135bn (US$1.66bn) versus an earlier forecast of JPY840bn. It also cut its forecasts for other Japanese carmakers.

Even before the disaster, Japan’s vehicle manufacturers were battling a rising yen and the removal of government subsidies on low emission vehicles.

Deutsche, however, stressed that uncertainty over the depth and duration of the supply disruption meant “it will surely be wrong in its absolute figures”. It has based its assumptions on a return to normal production after six months.

All Japanese automakers have suspended or slowed vehicle and parts production since the 11 March earthquake which caused hundreds of factories to shut.

The manufacturers continue to build vehicles overseas using existing inventory. Non-Japanese carmakers are also experiencing disruption to supplies from Japanese-based companies.