Blockchain in Automotive Industry : Spare parts and warranty
September 30, 2021

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#dltledgers automobile

While the financial sector has been using the blockchain for a couple of years, automotive businesses are only discovering new advantages of this technology. The auto industry is entering a new age of digitization that will significantly change everything we are used to with blockchain technology revolutionising the automotive industry. Two use cases that have enormous potential in the area of spare parts and warranty.

Counterfeit Avoidance 

Car manufacturers are concerned that service centres and garages in certain markets are knowingly (or otherwise) fitting counterfeit spare parts to their customers’ vehicles. Counterfeit parts jeopardise the manufacturer’s brand reputation when they underperform or even worse, cause accidents.

Having A Blockchain-based system connected with IoT sensors and smart devices would enable the service centre, the car manufacturer and the customer to trace the provenance of spare parts back through every step in the supply chain to their original manufacture date and location.

Currently, it can be a difficult and costly exercise for a Warranty team to identify if a warranty claim has been made against a genuine part or if the part in question is counterfeit, grey market or end-of-life. Using a Blockchain system that provides full traceability of part history will make it easy for the Warranty team to identify counterfeits quickly. Over time this will deter fraudulent behaviour and reduce warranty costs.

Recalls that are more efficient

When a car manufacturer determines a part is defective and may jeopardise the safety of the driver, passengers or other road users, they issue a recall notification to inform vehicle owners to bring their car into an authorized service centre so that a replacement part can be fitted. However, because most car manufacturers are not able to uniquely identify every part in every vehicle sold they need to issue the recall for a specific model and model year; which can include several 10s of 1,000s of vehicles. Yet at the end of the recall period, it sometimes becomes apparent that the defective part is only fitted in several hundred vehicles. Thousands of customers have been disturbed unnecessarily and recall costs prove to be far higher than necessary.

A Blockchain-based system that enables the car manufacturer to uniquely identify every single part will save a huge amount of money in the event a future recall is required; because the manufacturer will know which defective part was fitted to which specific vehicles and hence they will be able to issue specific recalls for individual VIN numbers. The manufacturer will be able to repair just those vehicles at far lower total cost; than if a blanket recall for an entire model year were issued.

Key Benefits for Automobile leaders

  • Cost-benefit due to targeted recalls
  • Better brand value due to fewer disruptions
  • Better visibility for the management

 

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