Blockchain is the next big thing going for auto industry

A type of public digital ledger for maintaining a permanent and tamper-proof record of transactional data, blockchain is used to record transactions across many computers.

The technology is bringing on greater transparency and helping advance new business models such as those related to car usage, alternative ownership and rewards programmes even as it looks to create brand attractiveness and loyalty.

Porsche, for instance, is testing blockchain applications directly in vehicles, including locking and unlocking via an app, providing easier automated payment systems, granting temporary access authorisation, etc.

Blockchain in advertising

Companies are also leveraging blockchain to create, deliver and measure advertising campaigns. Isobar India, the digital agency from Dentsu Aegis Network, launched a blockchain-powered campaign for Ceat Tyres to enable transparency throughout campaign delivery and performance.

Shekhar Mhaskar, Chief Growth Officer, Isobar India says, “Leveraging blockchain technology is imperative in this day and age primarily because of its many advantages.”

For Ceat, it meant getting “a transparent and unambiguous view of payment transactions and deliveries for every valid advertisement impression”. This made spillage of media investment close to nil and also restrained ad fraud.

Prachi Karan, Senior Director, Media, Isobar India says the campaign helped Ceat to transparently track all payment transactions written to an immutable ledger for every valid ad impression. This ensured that the key performance indicators of the campaign were met.

Mercedes’ initiative

Blockchain is at an inflection point and the automotive sector is challenging traditional business models with the use of this technology. Mercedes-Benz has leveraged it for more efficiency in its supply chain. It has developed a prototype programme that automates transactions as well as tracks vehicles. Parent company Daimler recently partnered with a blockchain firm to produce a hardware wallet for automobiles. The collaboration hopes to provide solutions for self-driving vehicles in the future and transfer accident information to the authorities and insurance providers. Other auto majors are looking to develop blockchain in new areas like autonomous driving. Toyota has teamed up with Massachusetts Institute of Technology (MIT) to build safer autonomous vehicles and enable better data management.

With the Toyota and MIT blockchain, vehicle manufacturers will be able to share autonomous vehicle data in real time. This will ensure that self-driving vehicles become products of tomorrow rather than a decade from now.

The first electric cars from Volvo Cars reportedly contain recycled cobalt mapped on a blockchain, given the intense interest in ‘track and trace’ to prove the origin of goods and raw materials. The technology is also helping curb synthetic identity fraud, the act of using information from multiple identities and then combining it to create a fake identity. With this, fraudsters can acquire credit cards and even take out car loans.

IBM is developing a vehicle automated payment system for tolls, parking, car sharing, and various other payment systems. Jitan Chandanani, Blockchain Offerings and Engagement Leader, IBM India and South Asia, says vehicles are evolving from a mode of transport to a new kind of moving data centre with onboard sensors and computers.

It is here that blockchain is coming in handy. Auto manufacturing is also global, with parts sourced worldwide and vehicles driven anywhere on earth. To check counterfeit parts and defect-driven product recalls, traceability is important in understanding a vehicle’s post-sale movements.

India focus

Blockchain has caught on in India with one of the biggest open ledger initiatives announced last year where vehicle and component makers teamed up to implement a vendor management system porting over two billion transactions a year to the new platform.

Mahindra highlighted this technology as the next big industry revolution way back in 2016 when it was looking to transform supply chain financing with blockchain. Along with IBM, the company is working to create a cloud-based, blockchain-enabled common platform for supplier-to-manufacturer transactions. This will drive trust and transparency through the supply chain and across its business ecosystem.

IBM’s Chandanani says the cloud-based application is one of the first such blockchain-enabled projects of its kind in India outside of traditional banking. While the initiative aims to deliver value to customers, it will also help Mahindra Finance in design and deliver new products.

The potential of blockchain was highlighted in a white paper by IBM in partnership with Oxford Economics, which surveyed 1,314 automotive executives across 10 business areas and countries apiece. Sixty two per cent of them said blockchain would be a disruptive force in the auto industry by 2021.

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