Master of Public Administration for Senior Leadership

Date

5-2026

Document Type

Capstone

Degree Name

Master’s in Project Management

Department

School of Professional Studies

Chief Instructor

Mary M. Piecewicz, MBA, MSPC, PMP

Keywords

import-export, automotive, currency volatility, procurement contracts

Abstract

Automobile import and export trade is a global venture and thus affected by global issues including cross border issues and currency volatility. Since it is a major in the economic field, it is vital that some risks be evaded in the initial stages of this trade to ensure sustainability. As a result, this research paper aims to assess how currency volatility as a key procurement risk impacts this business and why it is important to understand these dynamics. Currency volatility significantly influences automobile import and export procurement by shaping cost structures, competitive positioning, and financial stability within the global automotive industry. Since manufacturing entirely depends on internationally sourced components, raw materials, and cross-border distribution networks, fluctuations in exchange rates have immediate and long-term effects on procurement planning and trade performance.

Moreover, exchange rate movements across borders eventually impact the relative cost of imported inputs and exported vehicles. A depreciation of the domestic currency increases the cost of foreign-sourced components such as semiconductors, engines, and specialized parts, thereby raising production expenses and compressing profit margins. In contrast, currency appreciation can reduce input costs but may weaken export competitiveness by making domestically produced vehicles more expensive in foreign markets. Multinational manufacturers must continuously adjust sourcing strategies, pricing models, and production allocations to manage these fluctuations effectively. Beyond direct cost implications, currency volatility introduces uncertainty into long-term procurement contracts and capital investment decisions. Automotive supply chains often involve large-scale agreements denominated in multiple currencies, exposing firms to transaction and translation risks. Unexpected exchange rate swings can disrupt cash flow forecasts, delay procurement cycles, and necessitate renegotiation of supplier agreements. To mitigate these risks, companies adopt hedging instruments, diversify supplier bases, and localize production in key markets to reduce currency exposure. At a broader economic level, currency instability affects trade balances, foreign investment flows, and the overall competitiveness of automotive-exporting nations such as South Korea, Germany, and Mexico. Understanding these dynamics is essential for policymakers seeking to maintain industrial growth, stabilize employment, and strengthen trade performance in a highly competitive global market.

Thus, examining the effects of currency volatility on automobile import and export procurement provides critical insights into cost management, risk mitigation, and strategic planning. It underscores the interconnected relationship between foreign exchange markets and supply chain operations, emphasizing the need for adaptive procurement frameworks and sound financial management to sustain long-term competitiveness in the automotive sector.

In summary, this paper specifically examines the pre-contractual procurement phase to identify a gap in practice and proposes practical recommendations for early-stage currency risk identification, moving beyond complex financial hedging strategies as a key output.

Worcester

No

Download

Share

COinS