Even though blockchain has been a technology utilized in the financial sector for several years, automotive companies are only now discovering the advantages it offers. With the auto industry entering a new age of digitization, blockchain has the ability to revolutionize the automotive industry.
The once simple and standard cruise control function has now been revolutionized and turned into the self-driving car. The next big thing in the auto industry is the development of vehicles that can “talk” to one another and transmit data about maneuvers, road conditions and more.
The fact is, automotive companies have a tendency to invest quite a bit in the development of new technology. In fact, in a recent survey from Frost and Sullivan, it was shown that auto businesses are estimated to spend approximately $169 billion on the implementation of new technology in their organization in 2025, with about 0.6 percent of these investments being on blockchain.
Now the question is — how can vehicle resellers, manufacturers and lenders use this new blockchain technology to their benefit?
The Use of Blockchain in Car Sales and Leasing
When purchasing a car secondhand, many customers face the issue of compromising odometer data. This is where blockchain can be invaluable.
Because blockchain data is immutable, you can always compare the claims of the seller with the true information stored on blockchain. In fact, with this technology in place, you can check any information about the car you are buying including repair history, accidents, mileage and more.
Currently, a company DocuSign partnered with Visa and created a blockchain-based proof-of-concept that allowed customers to lease cars with a three-step process:
- Select the car (the system will record the transaction in the blockchain’s public ledger).
- Sign a smart contact (the contract includes the lease agreement and insurance policy).
- Drive away.
Eliminate the Possibility of Counterfeit Car Parts With Blockchain
At the beginning of 2017, officials in Abu Dhabi confiscated over 500,000 counterfeit auto spare parts that were worth about $4 million. It took them more than 20 hours to calculate the value of all the fake pieces.
According to representatives from Nissan, their car manufacturer alone loses more than $60 million each year in the Arab Emirates due to counterfeit car parts.
This shows how much the world needs a countermeasure for this. Blockchain technology to the rescue.
By using radio-frequency identification (RFID), car manufacturers can ensure proof of provenance for all spare parts and track a certain car’s location in the supply chain. Also, this information is all stored in the public ledger. As a result, it can help reduce the possibility of counterfeit parts being used.
Blockchain and Auto Insurance
If a car insurer receives fraudulent information derived from false claims or another channel, smart contracts (mentioned earlier) can help the company to validate the submission. With blockchain in use, insurers can check to see if a vehicle needed significant repairs prior to an accident, which could be the result of technical issues, or verify any other information from the submitter.
Blockchain Can Speed Up the Development of Self-Driving Cars
Although Tesla has already begun selling vehicles with a built-in autopilot option, today’s self-driving cars are still considered imperfect. They depend on the readability of road signs and quality of road markings. To help accelerate driverless car development, vehicle manufacturers must collect and process large amounts of data.
With blockchain, autonomous cars will be able to appear on the roads sooner, rather than later. This is because blockchain allows the transfer of needed data between vehicle manufacturers, researchers and owners.
While blockchain technology is already used by many financial organizations, it is quickly making its way into the auto industry.
