Blockchain technology is making headlines everywhere. As the digitizing trend sweeps across industries, blockchain has begun to capture more of the IT budget in the automotive industry.
Auto manufacturers are actively exploring the true potentials of blockchain across select functional areas such as Retail, Leasing, Supply Chain Logistics and Industry 4.0. The real time monitoring, audit-ability, and scalability are the main factors favoring blockchain technology to become the backbone of the automotive industry.
The auto industry is at the forefront of adopting new technologies. Blockchain technology is one of them. It’s being explored by many industry players like Toyota, BMW, Ford among others. Some are already using it while others are planning to do so.
The automotive industry is expected to witness significant changes over the next few years. With the advent of Industry 4.0 and Internet of Things (IoT), the automobile sector will undergo tremendous change. This will lead to greater efficiency, better quality and lower costs. There will be a shift from physical assets to digital ones. In this scenario, blockchain technology can play a vital role in automating processes, reducing operational cost, enhancing transparency and improving security.
Automotive Manufacturers are increasingly looking into the application of blockchain technology in various sectors including finance, insurance processes, supply chain management, vehicle manufacturing process and maintenance, customer relationship management, among others.
There are several advantages associated with the adoption of blockchain technology in the Automotive Sector;
Reducing Costs and Streamlining Transactions
The biggest advantage of blockchain is its ability to eliminate middlemen. Instead of relying on intermediaries like banks or dealers, blockchain allows to directly connect buyers and sellers. This means fewer fees and faster transactions. A study conducted by IBM found that blockchain could cut the cost of vehicle financing by $2 billion annually. Another study showed that blockchain could save manufacturers nearly $3 million per year by eliminating paper records.
Transparency and Compliance
Since blockchain doesn’t rely on a central database, it’s difficult to manipulate information. This makes it easier to verify the authenticity of documents and ensure compliance with regulations. For instance, blockchain can help prevent counterfeiting by allowing consumers to trace their vehicles back to the original manufacturer. Also, since the entire process is transparent, regulators are able to monitor every step of the supply chain and process regulatory requirements faster.
Increased Security and Privacy
Since blockchain uses cryptography to secure data, it ensures greater privacy and security. This means less risk of hacking and identity theft. Furthermore, since all data is stored on multiple nodes or computers simultaneously, it’s harder to tamper with. Blockchain has already been used to protect sensitive medical records. As such, it may be useful for protecting personal information collected during car purchases.
One of the most exciting things about blockchain is how it can transform the auto sector into a fully digitized ecosystem. By connecting cars to the internet, they become part of an IoT network that collects and shares data. This helps improve safety, efficiency, and customer satisfaction. Since blockchain is decentralized, it’s easy to add new features without having to ask permission from a centralized authority.
While many people view blockchain as a futuristic concept, it’s already being implemented in various sectors of the economy. The automotive industry stands to gain the most from this emerging technology. With blockchain, we can expect to see significant improvements in transparency, security, and efficiency.