Daring to be first

How auto pioneers are taking the plunge into blockchain
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The advantages blockchain can bring to the automotive ecosystem, both in facilitating collaboration among participants and enabling capabilities for new mobility business models, have gotten the attention of automotive executives. In addition to enabling a single source of data, blockchain can facilitate device-to-device transactions, smart contracts, and real-time processing and settlement. For the automotive industry, this translates into improvements and operational efficiencies in areas such as supply chain transparency, financial transactions between ecosystem participants, authenticating access to cars, and customer experience and loyalty.

Sitting at the core of these various objectives is information. In many cases today, this information is imperfect. It might be missing or incomplete, inaccessible because it’s housed in separate systems or only exists in manual form, or at risk from hackers or other intrusions. This results in additional processing time and costs, as well as increased risk for the business. A distributed ledger technology, blockchain offers a more transparent and secure way to conduct business. Information held on a blockchain exists as a shared – and continually reconciled – database.

In addition, blockchain technology can help advance new industry business models, such as those related to alternative ownership, car usage and rewards programs, and other mobility services that create brand attractiveness and loyalty. For example, Porsche is testing blockchain applications directly in vehicles, including locking and unlocking the vehicle via an app, granting temporary access authorizations and exploring new business models based on encrypted data logging. Blockchain capabilities, such as authenticating customers and tracking usage across multiple mobility services, enables brands to deliver personalized experiences aimed at creating customers for life.

Despite the technology’s potential, the automotive industry is still in the very early stages of applying blockchain to its business and product networks. To gain a better understanding of the industry’s current views on and future plans for the technology, the IBM Institute for Business Value, in collaboration with Oxford Economics, surveyed 1,314 automotive executives across 10 functional areas and 10 countries. (For more information about the research, see the Study methodology section.) According to our research, only a small number of OEMs and suppliers are currently ready for blockchain or have blockchain solutions that are ready for commercial use. As mobility services such as ecommerce become more prevalent and marketplace participants seek to transact business through the vehicle, the industry could find itself ill-equipped to meet their needs.

The good news is that our research did reveal a group of companies that are forging ahead. We call them the Auto Pioneers (see page 3 sidebar: Auto Pioneers). Knowledgeable about blockchain, these companies are exploring blockchain opportunities. Some of the Auto Pioneers are ready for blockchain today, while almost all of them plan to invest in the technology in the next few years. In this report, we share insights into the potential opportunities for blockchain in automotive, identify what actions set Auto Pioneers apart and offer recommendations for automotive companies to start their own blockchain journeys.

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Additional content

Meet the authors

Dirk Wollschlaeger

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, General Manager, Global Automotive, Aerospace, and Defense Industries, IBM

Matthew Jones

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, Digital Business Consultant

Ben Stanley, Automotive Research Leader, IBM Institute for Business Value

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Originally published 15 October 2015