Global Statistics Representing Automotive Blockchain Market Scenario
Blockchain is defined as a publically accessible and transparent technology that practices decentralized unanimity to maintain a network. The lack of central control by entities such as corporations, governments, or banks introduces high-security levels in data transmission. Several sectors, such as BFSI, manufacturing, telecom, and healthcare, are deploying this technology to gain cost and accountability advantages.
Benefits of Blockchain
The Need for Blockchain Technology in the Automotive Sector
The automotive industry not only stands tall in the race of innovation but also is one of the early adopters of advanced technologies. This nature of the sector, combined with the constant need to meet consumer requirements and sustain competition, makes it difficult for the players involved to track the changes in consumer behavior associated with demand and address the challenges associated with payments, supply chain visibility, and claim processing, among others. The deployment of blockchain technology is an ideal solution for the industry as it offers the accurate technological infrastructure required to address these concerns and introduce efficiency by means of process automation.
The advantages that blockchain offers in the automotive industry are quite narrow when compared with the general benefits offered in every other industry. The below-listed advantages of blockchain are specific to the automotive sector.
Vehicle Recalls: Automotive manufacturers recall vehicles in the case of defects, which are flagged by customers. These recalls are a proactive measure for road safety and, as an added benefit, they enhance customer loyalty. The recall process is tremendously high-security and expensive, and in most times, since manufacturers are unable to uniquely identify every part of the vehicle, the process can be time-consuming. In this scenario, blockchain can enable manufacturers to easily identify every vehicle part termed as defective by consumers easily, resulting in low time consumption, high convenience for customers, and cost savings for the manufacturer.
Claim Processing: The procedure of processing insurance claims in the automotive sector is slow and complex in nature, which directly hampers the parties involved, namely the insurers and policyholders. However, the smart contract functionality of blockchain technology can help establish a string audit trial for streamlining and automating the process at a later stage, resulting in the easy and quick processing of insurance claims.
Counterfeiting: The counterfeiting of spare parts by service center owners and garages is a key challenge in the automotive sector. Customers are attracted to counterfeits for the low prices, which takes away from OEMs’ profit margins. More importantly, low-cost counterfeits increase the risk of malfunctioning because of the low quality of these parts. For instance, in 2017, Nissan, one of the leading car manufacturers, confiscated an approx. of 500,000 counterfeit auto spare parts worth USD 4 million in the UAE.
Car manufacturers in the UAE suffer losses amounting to approx. USD 60 million annually due to counterfeits. In this scenario, the use of tracking systems integrated with blockchain can assist OEMs in tracking the source of these counterfeited spare parts by validating every stage of the supply chain. The deployment of blockchain here will reduce the time involved in identifying and countering counterfeiting, thereby reducing the risk of malfunctions.
Apart from these benefits, blockchain technology reduces data leaks and aids manufacturers in reducing operational costs. In light of the many benefits, the technology is expected to register significant deployment in the automotive sector, which will drive the automotive blockchain market in the upcoming years.
Application of Blockchain in Securing Customer Data During Vehicle Maintainance Transactions
There exists significant involvement of third parties for services associated with maintenance and insurance in the automotive sector. Thus, vehicle owners are compelled to disclose confidential information during cleaning or regular maintenance activities, which poses the risk of data leak and fraud. The deployment of blockchain enables vehicle owners to manage personal data and share information with service providers with maximum security. Additionally, the integration of blockchain with on-demand mobility services (MaaS) facilitates several forms of transport services into a single mobility service, which is accessible on-demand, thereby introducing efficiency in the operations.
The materialization of the concept of ‘Connected Cars’ by 2026 will offer potential opportunities for blockchain technology to evolve in the automotive industry. Blockchain will play a significant role in not only enhancing vehicles’ speed and quality but also aid in creating a transparent and efficient supply chain.
The info graph below depicts the estimated sales growth of connected cars from 2019–2026.
Automotive Blockchain Market: Regional Insights
The deployment of blockchain technology in the automotive sectors of North America and Europe is significantly high due to the maturing automotive sector as well as the availability of infrastructure that supports the integration of the technology.
Asia-Pacific and the Middle East are pegged to be promising regions for the automotive blockchain market during the forecast period as a result of the growing urge to embrace technologies in the automotive sector with an aim to gain a competitive advantage over the traditional market players. The public, as well as private sectors in these regions, are undertaking projects and making investments to establish a strong infrastructure for the integration and application of blockchain technology in the sector.
For instance, in 2018, the Roads and Transportation Authority (RTA) proposed an end-to-end vehicle lifecycle management using blockchain technology. In brief, the project targets the improvement of customer experience by offering vehicle-lifecycle services, from manufacturing to the scrapyard, by deploying blockchain technology. Establishing such a platform in the automotive sector can offer several benefits to industry stakeholders such as vehicle manufacturers, dealers, regulators, insurance companies, buyers, and sellers by providing transparency in the supply chain as well as lowering the cost of services.
Blockchain technology can also be deployed to track sale, ownership, and history of accidents so as to create efficient systems for the internet of things (IoT) networks, supply multimedia rights management, insurance record management, and government proof of identity.
Automotive Blockchain Market: Key Players
Several companies that operate in the automotive industry have considered blockchain as a disruptive force and are studied to be actively investing and testing the technology. Car manufacturers are conducting feasibility tests of blockchain technology on cars. For instance, in 2019, Porsche announced a partnership with Xain, a Berlin-based AI service provider, to test blockchain applications in cars. BMW has implemented ReachNow pilot schemes integrated with blockchain in operations in Seattle, Portland, Berlin, and London, among others.
Not only car manufacturers but several emerging blockchain service providers have been working on integrating car data with the technology. For instance. CarVertical is a startup that offers solutions based on blockchain technology so as to access car data that exists in the form of registers and separate databases with transparency. The key challenge these companies face is that such data isn’t available publically and acquiring it from a third-party source entails significant investment.
Some of the key players in the automotive blockchain market profiled in the report are Accenture, IBM Corporation, Microsoft, Carvertical, Helbiz, Tech Mahindra, HCL Technologies, Xain, Cube, Context Labs, Foam, GEM, RSK Labs, Carblock, NXM Labs, Bigchaindb, Dashride, and Consensys.
Automotive Blockchain Market Segmentation
By Mobility Type
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