Using Blockchain in Automotive

Blockchain is being used throughout various industries to revolutionize and optimize systems and processes. The automotive industry is just one of many that can be innovated with blockchain too.

Automotive blockchain systems can be developed to enhance various aspects of automotive manufacturers’ and dealers’ workflows, whether it be through supply chain management, logistics, payroll, or remanufacturing. There are many aspects of blockchain for automotive uses, and it can be just as revolutionizing to the whole industry as the Ford assembly line was in its time.

Using Blockchain in Automotive Supply Chain Management

Supply chain management is especially hard to maintain in the automotive industry. This is mainly due to parts being sourced from all over the world. Spark plugs and other systems associated with the transmission are often sourced from Asian regions, whereas drive train systems often come from Europe.

For this reason, blockchain can be especially useful for supply chain management in the automotive industry:

By linking each point in the supply chain to the blockchain, it is easy to track where parts are coming from, when they will be ready to be shipped, and when they will arrive.

Quality, quantity, part numbers, assembly and all other aspects of parts can be identified and updated through the blockchain.

It is also important to note that a car’s success is not directly identified upon dispersal. Due to this it can be hard to attain parts if a car sells dramatically well. Blockchain has the ability to provide a more transparent system for supply chain management.

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It is currently being developed in the shipping industry to quickly move objects around the world, utilizing smart contracts to automate various tasks that rely on human intervention. In automotive transactions, smart contracts can automate and speed up various aspects of vehicle life cycles.

Using Blockchain for Transferring Automotive Titles

No one enjoys going to the Department of Motor Vehicles (DMV). The wait times and paperwork add up to the lack of good experience — not because DMV employees are not qualified to perform their jobs, but because the system they work with is so outdated.

Transferring titles of ownership are just one of many ways in which blockchain can transform the automotive industry. At the moment, car titles are primarily paper-based and require either a physical visit to the DMV, or mailing in an application. With blockchain, it is possible to provide digital equivalents to current paper-based car titles. With these systems, it would be much easier to purchase or transfer the ownership of your vehicle.

Through smart contracts and the Internet of Things (IoT), it will eventually become possible to buy a car without ever having to speak to a person. So when buying a car, it would work like this. A person would choose the make and model of the car they want online, maybe a Mazda, or a Honda. At that point, they would contact the seller of the car. With blockchain, a smart contract could be drawn up between the two parties, outlining the terms and the time of payment.

Next, the car the buyer wants to purchase would be located at a specific spot — either at a private party, or a dealership. The locks on the car could be automated to open once the payment for the car is secured. From there, the title would be digitalized and the transfer of ownership would be complete, all without having to go to the DMV or interact with another person, which would also cut registration costs on the buyer’s end.

Increasing Remanufacturing with Blockchain in the Automotive Industry

Remanufacturing is a major part of the automotive industry. Look back at all the vehicles you have owned in your life, how many of those were brand new? One of the major global database companies, Statista, has published their report of the U.S. car sales market for the period from 1990 to 2017. According to the report, used car sales were almost always 30% higher than new ones. For example, in 2017 there was 17.1% of new car sales, and 42.7% of used ones.

Remanufacturing is an important aspect for all points of the automotive system, both for the consumer and the manufacturer. It is able to provide cheaper options to consumers through recycling of old parts — no one is going to spend more on a car that has already been driven. However, because these vehicles rely on repurposed parts, those parts are often difficult if not impossible to come by.

For this, a blockchain system could be developed for remanufacturers that would work as a sort of forum for tracking down used parts. Entities could request parts by updating the blockchain to include the part they need, how many they need, and the quality they are requesting. Sellers of parts could upload their entire inventory into the blockchain, thereby providing a system in which all available parts would be immediately visible to every blockchain member.

Remanufacturing is often considered to be a win-win-win situation: a win for consumers as they are provided with cheaper options, a win for producers as they are still procuring decent profits, and a win for the environment as remanufacturing greatly reduces CO2 emissions. All of this is made possible with blockchain.

Blockchain Can Improve Automotive Mass Recalls

Almost 400 million vehicles have been recalled within the U.S. since 1966. A vehicle recall is often a necessary process, which can end up costing automotive manufacturers billions of dollars. Recalls often occur when a vehicle has been released prematurely, and there may be safety concerns related to it. In order to prevent massive amounts of injuries and also potential lawsuits coming their way, auto manufacturers perform recalls.

However, it can often be hard to determine which vehicles specifically have been affected by problems. Blockchain works as an immutable ledger, recording information that cannot be altered unless a majority consensus is reached through the entirety of the chain. Theoretically, if proper supply chain management procedures are enabled with blockchain, a flaw in a series of vehicles can be identified immediately. From that point forward, those vehicles specifically can be recalled, thereby saving automotive manufacturers significant amounts of money in the process.

Blockchain is already being successfully used in food supply chain. E. coli has become a significant problem, and because of that a tracking system to determine the affected greens has become necessary. IBM and Walmart have teamed up and implemented it.

These same systems can be applied to the automotive industry as well, in order to provide a more transparent supply chain. One of the largest automotive manufacturers in the world, Mercedes, has just announced the launch of their own blockchain platform for managing complex supply chains.

Ensuring Customer Growth with Automotive Loyalty Rewards Programs

The loyalty rewards program is long overdue for a makeover. Currently, various automotive producers, such as Honda, Kia and BMW use loyalty rewards programs, yet these programs may be highly complex and ultimately make purchases more confusing for the consumer. By partnering with various institutions and placing rewards programs on blockchain, these systems can be simplified, cutting costs for both producer and customer.

Ideally, credit card companies can pair with vehicle manufacturers to develop loyalty rewards programs that operate autonomously through smart contracts. Say, some kind of reward is offered to customers once they reach a certain number of miles on their vehicle, like a rebate of some sorts, or a free vehicle inspection. This, in turn, causes customers to develop a certain sense of loyalty to vehicle producers as well as an incentive to maintain their current vehicles.

At the moment, there are various blockchain rewards programs that are open to businesses of all sizes. Loyyal is just one of many loyalty rewards programs being developed on blockchain technology, where businesses of all kinds can sign up and receive introductory Loyyal plans. These plans have been proven to increase revenue and simplify the long plagued loyalty rewards program.

Bringing Back Trust with Blockchain

Blockchain has the ability to bring multiple benefits to the automotive industry. Whether it’s through title exchange, loyalty rewards programs, remanufacturing, or supply chain management, blockchain has the ability to save both consumers, automotive manufacturers and governments significant amounts of money. Additionally, blockchain can be used for logging vital information necessary to ensure vehicle and consumer safety. If utilized properly, blockchain could bring up a revolution in the automotive industry.

To speed up this transition, Hyperledger has partnered up with BMW, GM, Ford and Renault to create a research group for blockchain development in the automotive industry. Additionally, Blockchain Research Institute (BRI) is also working on the potential use cases.

However, consumers and businesses are often hesitant to change, and those in the automotive industry are no different. A major obstacle that needs to be overcome is blockchain mass adoption. Blockchain is only useful when all points in the supply chain are integrated. There is no sense in having a blockchain if transparency is not wanted, and this is what many industries will have to overcome on their way to more efficient and streamlined processes.