Join the Disruption and Win: What Vehicle Lifecycle Blockchain Brings to Businesses

The blockchain technology has proved itself useful in many sectors, ranging from financial services to trade to government to media, and now the automotive industry is finally starting to discover its advantages. We already know why the tech will be beneficial for a regular car owner or a passenger, but the full list of the industry participants who are likely to benefit from the technology is much, much longer. So today we’ll speak about 6 other groups of market players poised to be the first to reap the rewards of our ongoing efforts.

This time we won’t dwell on the industry problems, as they are basically the same for businesses and their customers. The most defining features of the automotive space are its intense competition, a strict regulatory oversight, a growing pressure to implement the latest tech, and an ongoing trend towards outsourcing and distributed operations.

For decades it remained, in many ways, one of the most advanced industries in the world. However, the technologies are accelerating, and the consumer mindset is rapidly shifting from an ownership-centric model to a service-centric demand. The pace of change often exceeds the markets’ ability to adapt, adding to the known operational inefficiencies.

That means the industry is ready to be disrupted — in a good way. More importantly, a smart player has a chance to join or even lead the disruption, greatly multiplying their potential benefits. And that’s what the Vehicle Lifecycle Blockchain is created for.

So, assuming your business have managed to become one of the first owners of the VLB token, what exact benefits are we talking about? Let’s consider the top possibilities.

Car Manufacturers

Estimated benefits: at least $17 bn a year v

The carmakers and OEMs are certainly among those who know the pains of the industry better than anyone. The sales, still having not fully recovered after the Great Recession, are slowing down again, while the expenses are building up rapidly.

A major part of these expenses are warranty costs. As we have mentioned before (ссылка на последний пост), 30% of the total warranty costs (almost $17 billion in 2016) are due exclusively to poor operational practices. Using the VLB platform as an immutable trusted ledger, the manufacturers will be able to eliminate these costs completely, as well as to reduce other warranty-related expenses.

Moreover, VLB allows users to identify and track every part in every vehicle sold within the ecosystem. That will not only save manufacturers a huge amount of money in case a recall is required, but will also revolutionize the automotive supply chain, streamlining all related processes.

The use of smart contracts will also make it easier to enforce the recommended maintenance and repair practices and prices, eventually leading to increased customer loyalty. As the VLB token itself allows for loyalty-based microtransactions, the rewards programs are likely to become more efficient, too.

Dealerships

Estimated benefits: evaluation in progress

According to AccurateAutoAdvice.com, the gravest problem for most auto dealers is that the margins are extremely narrow, rarely more than 1–4% for a relatively new business. That subsequently leads to poor hiring policies, bad management, and difficulty meeting manufacturer expectations.

One of the reasons behind the situation is that the process of transferring ownership is really hard to optimize. Being still mostly paper-based, it requires a lot of man hours, and sometimes a dealer has to check the vehicle in question against multiple third-party databases to make sure it’s not stolen, scrapped, or encumbered. VLB makes it possible to accelerate or even to automate a significant part of this activities, leading to a major cost reduction and widening the margins.

Insurers

Estimated benefits: at least $12 bn a year

Just as with title transfer, claim management requires extensive manual paperwork. Unfortunately, most insurance companies use pretty arcane methods for handling data. As a result, policy issuance and claim management alone can account for up to 39% of total insurance costs. Moreover, 5 to 10% of all insurance claims worldwide are outright fraudulent, leading to additional trust issues.

Luckily, blockchain is perfectly suitable to solve both problems. VLB will streamline not only claims processing, but all subsequent payouts and service contracts as well, while making fraud virtually impossible. Upon full adoption, the platform will also enable insurers for accurate, customer-tailored policy pricing and improve their oversight over repairs quality and pricing.

Spare Parts Producers and Distributors

Estimated benefits: at least $6 bn a year

Fake spare parts remain a huge threat for the industry, especially on developing markets. It’s still nearly impossible to identify where a particular part really comes from, or even to know if a warranty claim has been made against a counterfeit part.

VLB provides full traceability of part history, giving OEMs a much-needed advantage against counterfeit spare parts market. The platform will also increase transparency in warranty monitoring and enforcement, so it won’t take much time to pull the plug on frauds and reduce warranty costs.

Creditors

Estimated benefits: evaluation in progress

It’s quite uncommon even for well-established businesses, not to mention individual customers, to pay for new cars in cash. The sale process typically involves getting a loan to finance the transaction. Needless to say, proper auto financing requires lots of verification steps to be done, which yet again makes blockchain a perfect instrument for costs reduction.

The VLB platform encompasses all necessary records within a single distributed ledger, meaning that a significant part of the auto financing workflow could be automated, reducing overall processing time and generating significant savings for all parties involved.

Vehicle Related Services

Estimated benefits: evaluation in progress

From what we said before, it’s pretty obvious that the full list of parties that are likely to benefit from the VLB platform implementation would be just too long. Who wouldn’t appreciate faster transactions, lower fees, and less paperwork?

Being a repair shop, a fleet managing service, or a car leasing company, any business involved in automotive industry will be able to utilize blockchain for better maintenance and repair, operational costs reduction, and improved interoperability with its partners. With VLB, the whole automotive sector will become more efficient and trustworthy.

And that’s the very beginning. The blockchain will prepare the industry for the upcoming environment of fully autonomous electric vehicles, new forms of ownership, and truly decentralized operations. In other words, the question is not who will benefit from the Vehicle Lifecycle Blockchain; it’s how to be among the first to embrace the disruption.