Blockchain technology can be one of the essential building blocks in the automobile industry in developing a new infrastructure and machinery for the vehicles of future. The fundamental characteristics of this technology which are immutability, transparency, and decentralization can have a deep-rooted effect on all the processes of the industry.
The automobile industry is entering a new age of digitization that can bring about significant changes. This technological advancement has made automotive more sleek and hi-tech, for instance- the standard cruise control function of a car has been revolutionized into self-driving cars which don’t seem a surprise to anyone anymore. Experts in this field reveal that the next big thing to look forward to will be that when vehicles will be able to communicate with each other in terms of transmitting data about road conditions or maneuvers that they will make. The vehicles will no longer remain just a mode of transportation and to bring this revolution blockchain will be the key player.
The automobile industry not only includes the design of cars but the complex machinery which goes into making them. The automotive companies invest a lot in upcoming technologies to make their products stand out and to ensure that they have something new to offer to the consumer so as to stand the competition. Let’s take a look as to how blockchain technology can bring substantial changes in different areas of the industry.
Business and Supply chain
Blockchain can act as a key differentiator since with this technology the companies can keep a digital track at each stage of product development, so starting from the source of the raw material, when and how was it manufactured, maintenance history and all other information is recorded. Similarly, all the parts of the product including the production data, design quality can be tracked until the final product is delivered. Since it is decentralized multiple supply chain owners can use this technology to substantiate the authenticity of their products.
The supply chain process in the industry is typically opaque and is made up of an ever-growing network of people and products. It includes numerous things such as vehicle parts, software, hardware, then there are dealers, distributors, insurance companies, regulatory agencies and more. The blockchain technology can be applied to all the phases of this supply chain from product inception, development, distribution, financing, retail, usage and even recycling.
Delivery of vehicles to the showroom
Blockchain can also play a vital role at the time when cars are ready to be sold. When vehicles are ready they are sent by ships, trucks, or by trains to the importers across the world. With the help of blockchain network, all the parties involved will be able to easily track location and condition of the vehicles. This will help them in adjusting the timelines and reducing the number of wrong orders. This will ensure overall improvement in the management of the inventories.
Another area where blockchain can have a positive impact is the financing of cars. Whether it’s a dealer, institution, or an individual, very few can afford to buy cars outright. Most of them look for loans for purchasing the vehicle. A typical auto financing includes lots of steps and paperwork from verification till the time the loan amount is dispersed. The application of blockchain technology here can lead to more efficiency since from customer validation to reviewing the documents till the transaction execution all can be done on the blockchain network without any risk of forgery. The data once stored is available to all the parties involved and is in encrypted and cannot be altered.
This technology can also be beneficial for the auto insurance companies. The immutable characteristic of this technology help businesses to effectively leverage their operations. The smart contracts can help in streamlining the submission of insurance claim information. It enables the insurance company to validate the submissions in case they feel that information received is fraudulent. The insurers will be able to check whether the vehicle already needed some serious repairs before the accident or any other information before they release the claim.
Reducing massive recalls
Recalls of a massive number of cars due to some production default has become quite frequent in the automobile industry. When the manufacturer finds out that there is a problem which can adversely affect the user in terms of safety, then he has to recall all the vehicles under that model which have been sold in that year since there is no way to find out which vehicle has the defective part. This causes a lot of inconvenience to the customers and can even affect the brand image. However, if all the parts that each vehicle contains are registered under the blockchain, such recalls will become more specific and less expensive for the manufacturer. The problems will be easily locatable and thus will improve the efficiency.
Second-hand auto market
Experts suggest that the driverless cars are soon going to become a norm though it may take some time for the developing countries. However, if car sharing becomes a thing of the future then blockchain will be a major contributor to its success. It will allow users to know how the usage of the car, its defects and the number of kilometers it has traveled and this information will be transparent to all the parties involved. Apart from shared mobility or better known as Mobility as a service the traceability of this technology will give an ample scope for an improvement in the second-hand car market. A buyer can easily know the source of replacement parts and when they were installed. On the other hand, the manufacturer will have better means to detect any possible fraud and the leasing companies will be able to calculate a better residual value of a vehicle while signing the contracts.
Blockchain technology can surely become a game changer in the automobile industry. It can not only streamline the processes but increase transparency and offer a wide range of value-added services to both the stakeholders and consumers.