Blockchain for automotive industry automobile

Blockchain for Automotive industry

Blockchain improves automotive sales, service, supply chain management, manufacturing, warranty tracking and many more sectors

What blockchain can do for the automotive industry?

Automobile companies have constantly embraced ground breaking technology solutions to solve challenges in sectors such as manufacturing, supply chain, logistics, sales, marketing, customer support and everything in between. With 4.8% annual growth, this industry sees rapid traction across geographies and is one of the hotbeds for technology innovations. Blockchain can benefit the automotive industry in many ways. Using smart contracts and IOT, dealerships can automate several processes involved in car sales, service, warranty claim processing and much more. Moreover, it helps the buyer and seller to avoid middlemen or third parties to involve in transactions or insurance claims. This decentralised ledger technology can help to build a state of peacefulness in customers, manufacturers and service centers with it’s transparency and immutability. The applications of Blockchain in automobile industry range from crypto tokens to provide loyalty rewards to their customers to supply chain visibility solution which can hold the integrity of provenance of the vehicle. Maintaining a tamper proof log of all records such as service logs, details of wear and tear of spare parts etc can help the manufacturer to estimate the actual resale value of the vehicle. Let us see in detail which sectors in the automotive ecosystem is first going to be influenced by Blockchain.

Secure Like Never Before

The blockchain is built in Public key cryptography, a method for verifying digital identity with a high degree of confidence.

Middleman-free Transactions

In a peer to peer model, every peer in the network is a server and client. Thus eliminating the middlemen in processes, between users. 

Immutable Data Storage

Enables the secure automation of complex, logical agreements and the business processes using data gathered by Oracles. 

Reduced Risk

Creates a more secure, transparent network and creates new avenues for regulators. DLT allows for near real-time settlement of transactions.

Real Time Processing

Enables transactions to be made in real-time between users on the network. Allowing any two parties to transact directly with each other.

Smart contracts

 Smart Contracts are virtual agreements encoded on the DLT that can be automatically reconciled based on logical conditions.

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Targeted vehicle recalls

Car manufacturers often issue recall notifications to their customers when there is a defect in the delivered vehicle which could affect the road and travel safety. Unfortunately, most car manufacturers are not able to uniquely identify every part in every vehicle sold, so they need to issue the recall for 1000s of cars even if the defective parts are installed only on a few cars. This process is a loss of money to the manufacturer, moreover, it results in disturbing 1000s of customers. A Blockchain based system that enables the car manufacturer to uniquely identify every single part will save a huge amount of money in the event a future recall is required. Since the manufacturer will know which defective part was fitted to which specific vehicle, they will be able to issue specific recalls for individual VIN numbers. This could save a lot of money and time for the manufacturers.

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Identification of counterfiets

Out of profit greed, some service centers and garages are intentionally fitting counterfeit spare parts to vehicles. This, in turn, affects the brand reputation of the manufacturer when these counterfeit parts underperform or even malfunctions. Using a Blockchain based supply chain system, the provenance or genuinity of spare parts can be easily verified. The supply chain system connected with IoT sensors and smart devices would enable service center, manufacturer and the customer to trace the authenticity of the spare parts by verifying every step in the supply chain to its original manufacture date and location. Such a system can provide full traceability of spare parts and also help the insurance and warranty claim monitor teams to identify counterfeits quickly

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Automated Insurance Claim Processing

Managing customer identity online is an expensive and time consuming process. The user has to register online for the service which may require additional steps like a face to face interaction as might be the case with financial institutions. The user should also authenticate their log in thereby proving that they are authorized to access that portal. It becomes repetitive when the user has to go through these same steps with each new service provider. In addition to being repetitive, it also raises privacy concerns as these service providers store huge amounts of identity information with them. Blockchain based identity management solution solves this problem by cutting out all the third parties. The user would register on the Blockchain and, as required, authorized parties can simply access that information on the network. This eliminates the need for the user to register with every new service provider. While best practices for this application are still being developed, it shows potential. But privacy still remains a concern as once information is stored on Blockchain, it is accessible to everyone in the network. That opens up a new avenue for research.

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Crypto loyalty tokens

Rewards programs are a common tool for driving customer engagement, retention, and additional revenue across a variety of sectors, including automotive sector. The inefficiency of current loyalty programs causes the reward points go unused. Loyalty programs are rarely integrated and the ability to accrue value is limited. There is a need for a shared database to manage high volumes of transactions and enable permissioned access and program execution so that loyalty engagements serve both consumers and the numerous organizations with which they interact. On a blockchain based loyalty program, on initiation of a loyalty transaction such as the issuance, redemption, or exchange of a reward, the system creates a computer-generated loyalty token, which is a base for all types of rewards, including points. The loyalty token’s unique identifiers can be updated on each participant’s ledger and made available across the network.

Faster and simpler cross border payments

Faster transactions

Payment process for a car purchase is very time consuming. The manufacturer has to wait weeks before it receives the payment for shipment of a car. The delay is caused by multiple parties involved in the payment process such as credit letter from purchaser’s bank or even invoice and documents verification process which involves a lot of paperwork. A Blockchain based system would enable greater transparency of accurate information between the different parties, faster processing of export/import and banking documentation and ultimately reduce the settlement period before the manufacturer receives payment for cars delivered.

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Authentic service records

Service record of a vehicle plays a major role in estimating the resale value of the vehicle as well as helps manufacturers to validate the insurance claims. But, the service records are can not completely secure. These records can be forged, edited or manipulated either by the customer or third parties to benefit undeserving credits. A Blockchain based system would enable service events details to be stored in a shared ledger that all parties have access to. Transparency of information about a vehicle’s service history enables the secondary buyer, or the manufacturer to better evaluate the vehicle. Moreover, real wear and tear would help the auto finance provider to more accurately gauge the residual value of the vehicle as the lease approached its end of contract date.