We’ve heard a lot about blockchain technology over the last few years. While blockchain has many potential applications, the most well-known use for blockchain has been in the verifying of cryptocurrency transactions. Bitcoin and other cryptocurrencies rely on blockchain for safe, secure peer-to-peer monetary transactions.
But what are the other uses of blockchain? More specifically, what can blockchain do for the automotive industry? In short, it will change the way that manufacturers, dealers, vendors, insurance companies and lenders interact with one another.
Blockchain provides a centralized database that can be securely accessed by all parties involved. It will eventually enable a centralized repository for all automotive data and will prevent most forms of data manipulation and discrepancy due to fraud or human error.
Here are some examples of how blockchain could start shaking up the auto industry in the near future.
Creating Versatile Payment Options
Subscription services are fast becoming a part of auto sales. So are ride-share and pay-as-you-go vehicle borrowing arrangements. As consumers start to drift away from standard monthly payments, blockchain can help keep it all straight.
Blockchain can also improve communication between interrelated agencies such as DMV, Toll Roads, and traffic court. While it might make it harder to dodge a parking ticket, it will mean greater efficiency across all of these services.
Maximize Vehicle Resale Values
By centrally tracking vehicle options, repairs, mileage, and auction reports, blockchain can create a more accurate and consistent basis for vehicle valuation. We have already started to move toward this ideal, but blockchain would provide for much less guess-work in vehicle valuation in the future.
Reducing Warranty Costs
Warranty repairs are a huge expense for manufacturers. Some estimate that as much as 30% of all warranty repair costs can be traced to poor practices and processes at the dealer level. Blockchain can help streamline these processes and mitigate poor dealer practices.
Parts counterfeiting is becoming a big problem globally. A centralized database of parts would help to ensure that parts beings sold in the marketplace are authentic. Furthermore, blockchain can help with parts availability and distribution across channels and between dealers and manufacturers. Imagine the benefit for a manufacture being able to see what’s in stock throughout the distribution chain in real time.
Optimize Insurance Claim Management
Insurance companies have been known for inefficiency in issuing polices and managing claims. Much of this can be attributed to poor access and distribution of data. Some estimate that 39% of total insurance costs are directly attributable to claims management, policy issuance and servicing.
Another way that blockchain can help with insurance is in the area of insurance fraud. An estimated 5-10% of all insurance claims are fraudulent. Blockchain can help with verifying claims and preventing fraud.
There are so many uses for blockchain technology. It is inevitable that blockchain will eventually become part of everyday life across many industries. With the automotive industry consistently on the forefront of technological advancement, it is only fitting that blockchain technology will become part of the automotive industry in the early stages of its development.