With its distributed and decentralized nature, blockchain technology holds immense potential for transforming the automotive industry. It can help advance new business models such as car usage, rentals and rewards programs. It can also help with traditional automotive services, namely, the industry’s manufacturing supply chain. There are several blockchain use cases in automotive, some of which we will be discussing in this article.

62% of the auto industry expects blockchain technology to become a “disruptive force” within it by 2021.

IBM


Although the automotive industry realizes the potential impact of the blockchain technology, it is still in the early stages of blockchain adoption. Our analysis team has identified a broad spectrum of viable blockchain use cases in automotive. These use-cases will help in facilitating collaboration among participants and enabling capabilities for new business models.

Blockchain in Vehicle Manufacturing

Tracing and verification of parts

In a blockchain-based manufacturing supply chain of vehicles, information related to vehicle parts such as its manufacturer, date of manufacturing, etc. will be captured and stored on blockchain. As the parts change hands while moving from the manufacturer to the end customer, information will keep updating on the blockchain. This will enable all the stakeholders – such as the service center, car manufacturer and customer to trace and verify the origin of vehicle parts through the supply chain to the original manufacturer.

A blockchain-based system will provide a unique digital ID for each part manufactured which will contain key data, such as manufacturing date and ownership-related information. In case of part failures or accidents, blockchain could help to identify the root cause, decide who should be responsible, and settle disputes.

Targeted recall

A solution based on blockchain technology will enable car manufacturers to identify vehicles that contain defective parts, and issue targeted recalls or service bulletins for these vehicles.

A blockchain based solution will help drastically reduce the costs of recalls. The solution will also track the status of the recall. For instance, the solution can track the vehicles received by the dealer for repair. This tracking can be used for regulatory reporting to the government.

Suggested reading: A strategic approach to drug recall

Process Optimization

The automotive manufacturing process has an opportunity of implementation of various use cases. For example, a distributed ledger can contain bills of lading for vehicle components, quality-inspection records created during the manufacturing process, and WIP information for each vehicle assembly from start to finish. This would help the required authorities track the parts in real-time.

This blockchain use-case in automotive supply chain provides inventory visibility to the manufacturers like never before. With such a great degree of visibility, manufacturers can predict demand spikes, recalls etc. and manage their manufacturing schedules.

Connected supply chain

Blockchain technology can be applied to each of the phases of the supply chain: from product inception, designing and development to distribution and financing. It will connect automotive supply chain from manufactures automotive organizations to seamlessly order or sell, track and pay for goods once they arrive at their destination. This will have the following impact:

  • Firstly, the relevant data will be captured, stored, and updated on blockchain. Transactions will be viewed and verified by all the parties in the blockchain network.
  • Secondly, the initiation of payment processing could be done automatically through smart contracts.

Connected IoT sensors and smart devices could measure the condition of containers. IoT applications help to monitor, manage and control devices remotely and create new actionable insights from real-time data. IoT devices can record and maintain the complete history of a vehicle – including repairs and maintenance history.

Suggested reading: Blockchain meets supply chain finance

Unorthodox Blockchain Use Cases in Automotive

Peer to Peer Sharing Ride-sharing and on-demand mobility services (MaaS)

A blockchain-based P2P ride sharing platform will provide a trustless system for customers to rent out their vehicles for other people to use. Users and car-sharing providers (fleets, organisations or individuals) would register themselves on blockchain. Once all the relevant participants are present on the blockchain, they can exchange data securely and seamlessly. This car and ride sharing platform will allow individuals and fleet auto owners to lease their vehicles for short-term.

An authenticated user would be able to access this platform through a mobile app, which will provide the details of cars that are available for renting. A car could be booked and paid for using the app. Data would be stored in a decentralized manner – therefore the app would know how much to charge for the use, with the transaction securely taking place on blockchain. The app would also process all payments following completion of the trip and update the user’s record with a history of that trip.

Data associated with each vehicle:

  • Vehicle Location
  • Keys to unlock the car
  • Agreement terms (Cost per mile, insurance details , etc.)
  • Payment information

It is worth noting that rides using a blockchain-based platform wouldn’t require to be confirmed by any central authority – and the platform would efficiently handle the surge pricing mechanism.

Auto leasing and finance

A blockchain platform that facilitates vehicle tracking would be a game changer for auto deals. Dealer management system created on blockchain will leverage secured communication and eliminate data risks in the leasing sector. The platform would connect the involved entities when leasing a vehicle to a customer in a secure way. From performing KYC customer checks (e.g. licence and credit check) prior to leasing the vehicle, storage of leasing agreement/contract on the blockchain, to automated payment once the vehicle has been returned – the platform would seamlessly handle all processes.

Toll Booths

Vehicles will be able to pay their toll taxes automatically as they pass through the toll booths. IoT applications will monitor and detect the vehicle information, and send data to the distributed ledger. The smart contracts associated with the ledger will initiate payments from the vehicle owner.

Suggested reading: Guide to Smart Contracts

Conclusion

The automotive industry is in the very early stages of implementing blockchain at commercial scale. So, while it’ll take time for a full-scale adoption – it’s time that the companies start shaping their blockchain strategies.

Does your automotive business need blockchain? Drop your email here to find out.

Author

Marketing manager at Deqode known for devising value-based blockchain solutions to clients. Experienced in advising enterprise clients who want to move to blockchain.

1 Comment

  1. There is a need for a digitalized dealership which has the ability to meet the growing expectation of the customers in this digital era and this can be obtained through the Automotive Dealer Management Solution. The solution can track the vehicles received by the dealer for repair.

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