Automobile exports: Exchange rate, export price and retail price

Yushi Yoshida and Yuri Sasaki

The World Economy, 2024, vol. 47, issue 2, 519-543

Abstract: By using information on the geographical locations of exporting firms, we transform a national‐level dataset into a quasi‐firm‐product‐level dataset. First, by restricting the dataset to the two exporting ports out of over 100 ports, consistent with the multiproduct exporter model, we find heterogeneity in the exchange rate pass‐through (ERPT) among the auto models of a single automaker. We find weak evidence that the core product has a lower ERPT. Second, coupled with the manufacturer's suggested retail price in the US market, we find that the sales margins of US distributors have shrunk substantially, particularly when the US dollar depreciated after the global financial crisis. We find supporting evidence that a higher‐quality product has a lower ERPT.

Date: 2024
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