5 Reasons The Automotive Industry Needs Blockchain

As technology continues to flourish, the automobile industry has also shown a rapid rise in its application. Self-driving and autonomous cars are now making headlines, and car enthusiasts can’t wait for them to launch. According to research, by the year 2020, 250 million connected cars will be on roads all across the globe. With so many rapid developments in vehicles, such as cloud-based core informatics, smart sensors, and a highly connectable infotainment system- the need for data management has increased by leaps and bounds. This is when the technology of blockchain comes to the rescue. The blockchain is a simple medium that allows the shared access to data securely, hence maintaining the privacy of the participants. In easier words, it is a distributed ledger that offers superior data encryption methods to maintain user safety and confidentiality. In fact, blockchain is now being used in many areas apart from cryptocurrency. No wonder automobile experts are also impressed by it.

The application of blockchain in automotive technologies can resolve some of the most complicated car related issues, especially the lack of security and vulnerability in the connected car industry. Blockchain has provided some innovative solutions that can redefine the entire automotive ecosystem.

You can guess the popularity of blockchain in the automotive industry by a simple fact- By 2025, members in the automotive sector are anticipated to spend 0.6% of their total IT budget on blockchain technology, alone. With so many practical applications, like supply chain management to leasing- the future of blockchain in the automotive industry seems very promising.

Let us take a look at how blockchain is emerging in the automotive industry today:

1- Redefining supply chain in auto parts

It should not be a shock that many auto parts dealers and service centers struggle with the verification of original parts. Many times, inferior parts are installed that cause irreparable damage to the reputation of the part supplier brand and the automaker too.

To deal with the issue, automakers have started looking for state-of-the-art anti-fraud technologies. Needless to say, blockchain can help address this problem by creating a unique ID and timestamps for every part. These tags can be connected to blockchain to add a level of authenticity protection. Since all information on blockchain is strictly encrypted, it can only be accessed by the manufacturer and the owner of the vehicle.

This idea was launched by a forward-thinking German brand, Innogy SE. A unique idea named The Digital Twin was based on the concept of blockchain and keeps fraudulent services at bay.

2- Streamlining processes

The automotive industry has many ERP and operational systems that handle the manufacturing process and generate confidential vehicle data. This sensitive information is communicated to hundreds of other systems that are dependent on a chain of data feeds so that all functions are performed smoothly.

By introducing blockchain technology, this situation can be simplified to a great extent. It reduces the risk of two or more systems using conflicting information. Plus, it also eliminates the requirement of auxiliary systems that are needed to proofread any errors or inconsistency between the systems. Hence, both people and software systems can work faster and with more efficiency.

Blockchain has revolutionized the way processes, and data can be streamlined in the automotive industry. It not only alleviates the need for regulatory approvals but is redefining the way in which vehicles will interact with the environment.

3- Smart contracts

We all know that buying and selling cars involves a lot of paperwork. Smart contracts are slowly changing the way it will happen in the future. Smart contracts are small programs based on the blockchain technology, that automate the exchange of things based on their value, according to a set of predefined rules. People are already using it to exchange cryptocurrency, stock shares, documents and any other conceivable commodity. So, why can’t cars be bought and sold on the same concept?

The future of the connected car industry is all about smart contracts. Whether it is a supplier hunting for a contract or a buyer looking for a car loan- smart contracts can automatically evaluate their credit ratings and make things process even faster.

What’s more, blockchain emits “the middleman,” which means, even more saving of time and money!

4- Infotainment

Modern connected vehicles have an infotainment system that would put any full-fledged home entertainment system to shame. Blockchain can become an essential part of the in-vehicle infotainment technology by allowing users to buy any apps, movies, songs and other services through a secure channel.

5- Vehicle tracking

Another common and unethical practice in the automotive industry is the sale of showroom vehicles without informing the bank that has paid a loan for the vehicle. It is a seemingly common practice that provides some working capital to the dealer to keep things rolling. With the use of blockchain technology, there will be instant transparency that will not allow this practice.

The Autoblock is one such platform, that is based on blockchain technology. It provides a complete history of the vehicle whenever it is required. It is a one-of-a-kind platform that not only monitors where and how a car is driven but also the situations in which the engine was worked hard. This car history can predict the resale value of the car accurately and help people get a fair deal while buying a second-hand car.


Like every new technology, there will be ups and downs before blockchain is fully integrated into the automotive sector. But, nonetheless, blockchain seems to have a vital role in the future of connected vehicles. We hope that blockchain can bring decentralized ownership, sheer transparency, and increased safety can turn into a reality soon.

Do you think blockchain has the power to revolutionize the automotive industry shortly? If yes, share some of the reasons why you believe blockchain should be a part of the automotive industry:



ABOUT Erica Silva

Erica Silva is a blogger who loves to discover and explore the world around her. She writes on everything from marketing to technology, science and brain health. She enjoys sharing her discoveries and experiences with readers and believes her blogs can make the world a better place.

Find her on Twitter: @ericadsilva1


To Top