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Can blockchain tech drive solutions to the automotive industry’s biggest challenges?

Can blockchain tech drive solutions to the automotive industry’s biggest challenges?


Motor vehicles are an integral part of the world we live in. According to Statista, there were about 79 million vehicles sold worldwide in 2017 with the number expected to increase in 2018.  It is without doubt that the automotive industrycontributes immensely to the global economy. The industry will continue to grow as the world population continues to grow.

Current Industry Challenges

The mammoth industry, however,  isn’t without challenges of its own. To begin with, the automotive industry is affected by information asymmetry. All the participants in the industry are not privy to the same information. Customers and SMEs are especially affected by this. Major corporations do not avail all the relevant and important data which could affect purchasing decisions to customers. For example, data about any possible faults in a vehicle is not available for consumers and they get the short end of the stick when the vehicle does not perform accordingly.

The aim of this information asymmetry is to create a monopoly over relevant information with regard to products and services. This monopoly benefits manufacturers and middle-men who gain an advantage over customers and SMEs due to the information they possess. Customers end up paying more than they should or are shortchanged as far as the services they receive are concerned because they don’t have access all the relevant information. Customers have to settle for what they are given while manufacturers and middle-men have the liberty to choose which deals they want to go for.

Zero-sum games also affect customers and SMEs in the automotive industry. Manufacturers and middle-men pass on their losses onto customers to ensure that they are not at loss. Customers end up spending more than they should on a product and unknowingly so. The zero sum games in the automotive industry affects the pricing of products with some manufacturers and dealers hiking prices to cover their end. They also affect the quality of cars produced as some manufacturers may produce substandard products in order to cover their losses.

Overall, the experience of a customer is degraded, negatively affecting the industry as a whole. Cars are highly beneficial to their users and ensuring that the overall experience that comes with their purchase and use is enjoyable is important.

Can Blockchain Technology Provide A Solution?

The properties of blockchain technology may provide much-needed solutions to the challenges faced by the automotive industry. A blockchain-based system would change the fundamentals that auto related industries run on. The transparency of a blockchain will eliminate information asymmetry by giving all parties equal access to relevant data in the industry. When customers and SMEs gain access to the same information manufacturers and middlemen have, they can make better informed decisions when making a purchase or a trade. The free flow and transparent access to knowledge about the industry’s proceedings will benefit the entire ecosystem, from manufactures, service shops, insurance companies, and used-car dealers.

The availability of all the relevant information through the blockchain will also end zero-sum games. Each part of the ecosystem will have to take responsibility for its own costs. Customers and SMEs will no longer fall victim to the zero-sum games of manufacturers and middlemen, as they will have all the relevant information to counter them. The economic benefits of the end of zero-sum games will be high for the customers and SMEs.

The decentralisation of data collection and distribution systems will also ensure that the true value of the data is exploited. The value of the data lies within the benefits it provides for those using it. In this case, the customers provide data as far as their experience with automobiles is concerned and the benefits of this data needs to return to the customers. By using blockchain technology, one can ensure that customers and SMEs receive the benefits of the data they provide.

Also Read: How automotive electronics architecture drives sensor technology change

Auto Service Powered by Blockchain

Cahrenheit has developed an auto service related ecosystem powered by the VeChainThor Blockchain. The revolutionary system is designed to usher in a new era of experiences and utilities in the automotive industry. Cahrenheit’s system is divided into 5 major parts which work as follows:

1. CAHtrust: This is a decentralised search platform for listings, ratings and reviews based on real data contributed by other consumers. The platform is completely decentralised and secured by the blockchain. The decentralisation of it ensures that there is organic traffic and the platform itself is a low cost one. Customers who provide reviews are incentivised through token. There are also minimal listing fees on the platform unlike centralised channels which apply a “take rate” on transactions.

2. CAHmart: This is a seamless and highly optimised marketplace for the automotive industry. It allows dynamic pricing for SMEs ensuring that they can also compete fairly on the market. SMEs are also able to refer business to other SMEs and in exchange, they can get tokens or future business referrals. CAHmart also carries minimal service fees unlike current systems which carry a “take rate” on transactions.

3. CAHanalytics: This is a data analytic hub which uses extensive, live, cross referenced and accurate data sets to achieve maximum optimisation of the system. The analytics hub enables data origination directly from customers and SMEs. It also allows for data monetization through EDUs via token payment without risks and costs from intermediary parties. Live and big data analytics allowing better pricing and opportunity for new product development. CAHanalytics provides customized data and payment solutions for EDUs to use, lowering overall system costs and making purchasing process easier.

4. CAHmine: This is a suite of IoT devices attached to cars and at SMEs places of business. They give accurate real time data of car performance and driver behavioral data can be collected. Data collected will enable AI and big data enabled algorithms to be developed and make the ecosystem as whole better.

5. CAHnode: This is an incentive program for token holders. When a user holds a certain number of tokens, they will enjoy premium service, products, earn higher rate of tokens.

Unlocking the Full Potential thru Blockchain Technology

While the automotive industry is plagued with various challenges, it is on the brink of a revolution with the introduction of blockchain technology. Issues of information asymmetry, zero sum games and pricing are currently affecting the industry. However, these challenges can be successfully tackled, unlocking the full potential of the automotive industry.

The advances brought forward through blockchain technology will see the elimination of most, if not all, of the problems in the industry. Decentralised systems are the future, and the automotive industry may be on the verge of experiencing the advantages of decentralisation before many other industries. Power over the industry and proceedings therein, will shift into the hands of the customers and SMEs bringing a much needed balance and giving consumers a better foothold. The power shift will have direct major financial benefits for all parties involved and the global economy as a whole. The future of the automotive industry can become much brighter if the corrective measures are taken.


Author- Kenny Au, co-founder of LUXSENS