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The automotive industry has always been open the advances in technology, as they help this sector immensely. The current revolution in the automotive industry is driverless vehicles, due to the numerous advantages they offer. However, there is another technology, which has been disrupting industries all over the world, making its way to this sector.
The automotive industry will start implementing blockchain technology as its features such as decentralization, immutability, and transparency have a huge impact on various internal processes. The technology helps keep up with the current trends in the industry – customers are sharing vehicles, while vehicle ownership is no longer a big deal.
If you take a look at consumers today, their behavior is changing, due to services being available at demand and e-mobility. There are various problems within the industry which blockchain can fix. For example, as the systems of the value chain are fragmented, the process of purchasing and delivering vehicles to customers slow and complex. Also, there are other problems such as verification and tracking components of vehicles.
All the stakeholders, such as the consumers, financers, dealers, suppliers, and the manufacturers stand to gain immensely from blockchain technology as it can solve a large number of problems. To drive home the point, here are five ways the automotive industry can use blockchain technology:
Easier to recall defective vehicles
You would have come across various news articles where manufacturers had to recall thousands of vehicles from the market due to defective parts. The reason why manufacturers have to recall such a large number of vehicles, even though only a small number of them are affected is that they don’t know which ones have the defective parts. Blockchain can become revolutionary in this process as it becomes easier for them to keep track of all the vehicles. There are downsides with large-scale recalls as it is disruptive and damages the reputation of the manufacturer.
Blockchain can become revolutionary in this process as it becomes easier for them to keep track of all the parts by maintaining a registry on the network. It makes recall easier while reducing the cost of the entire process.
Enhanced auto financing
Not everyone has the resources to purchase vehicles right away as soon as they approach a dealership. In most cases, when you have to get financing for a vehicle, the entire process is time-consuming. For starters, auto financing involves numerous steps in verification, as the lender needs to ensure that you have the financial capability to pay off the loan on time. Also, you have to wait for at least a week or more, before you get any information regarding the status of auto financing.
Blockchain technology will enhance auto financing, by making it easier for both parties. It can ensure that the loan passes, only after you upload the necessary documents and gets verified.
Improved use of incentives for customers
To improve customer retention and engagement, manufacturers provide a plethora of incentives to their customers. Also, they use the incentives to drive business to other industries, such as insurance and retailers to name a few. However, it isn’t always necessary that the consumers will utilize these incentives. There are situations where the consumers don’t use the loyalty points.
Blockchain is a game-changing technology as it allows the consumers to convert the loyalty points into a currency used by the manufacturer. The consumers can use this currency to purchase products and services that exist within the manufacturer’s network. For example, if the consumer wants to purchase a spare part at a discounted price, they can use the currency.
Personalized insurance contracts
These days the insurance contracts are not flexible enough to cater to the behavior of their customers. Blockchain can solve this problem through the implementation of personalized insurance contracts, based on the behavior of their consumers. For example, according to the mileage, the number of accidents, damaged parts, and driving speed, the premium and payouts of the insurance policy will vary. As there are records about the owner of the vehicle, the insurance company can use this data to provide quotes in the future. Also, the process of claiming insurance becomes straightforward as blockchain automates it.
Recognition of genuine spare parts
Another problem in the industry is the availability of fake parts in the market. As garages and service centers have no way of verifying the spare parts, they fit them on the vehicles of their consumers. The downside is that these parts don’t last as long as their genuine counterparts, which is a big issue. Also, when consumers go to claim warranty, they are unable to do so as the parts are not legitimate.
Blockchain technology makes it easier to deal with these problems as it becomes easier for everyone in the industry to track the spare parts, all the way to the company that manufactured them.
These are the five advantages of blockchain technology in the automotive industry. With the help of sound strategies, blockchain technology can revolutionize this industry forever!
Brought to you by BlockchainSingapore.