Analysis of Transaction Exposures: Mercedes Benz & Toyota Motor Corp.

This report provides a detailed analysis of the transaction exposures faced by Mercedes Benz and Toyota Motor Corp. It begins by defining transaction exposure and then examines the specific exposures arising from each company's international contracts and supply chains. For Mercedes Benz, the report highlights exposures related to contracts with Eagle Ottawa, Inteva Products, and Nemak, detailing how currency fluctuations impact payment obligations. For Toyota, the analysis covers exposures stemming from contracts with Tesla Motors, Samsung Electronics, and Bridgestone Americas. The report then delves into the tools and methods employed by each company to manage these exposures, including financial hedging strategies such as back-to-back loans and currency swaps (Mercedes Benz), and operating hedges like invoice currency and leads/lags (Toyota). The report concludes with a critical evaluation, suggesting that while both companies have effective strategies, Toyota's approach, with its broader range of methods, may be more comprehensive in managing currency risk. The analysis is supported by references to relevant academic literature.