Blockchain & the Automotive Supply Chain – A Future Partnership?


Blockchain is expected to become a “disruptive force” in the automobile industry by the year 2021, according to 62% of industry executives polled in an IBM Institute of Business Value survey.

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 automotive, 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.

Let’s look at three ways blockchain is set up to transform the automobile supply chain:

Elimination of counterfeit parts: Counterfeit auto parts have always been an issue within the automobile supply chain. Despite advances in the past few decades, counterfeits parts are still a problem and can cause severe supply chain disruptions. blockchain allows the creation of a unique ID for each part, along with immutable timestamps i.e. the date and time when the part was produced. To ensure authenticity protection, these tags that link to the blockchain can be integrated into the parts.

Vehicle Tracking: Odometer fraud, or “clocking,” whereby vehicle sellers or dealerships tweak the odometer to make it seem that the car has been driven fewer miles than it actually has, which can increase the value of a vehicle, is a serious issue in the automotive world. According to a National Highway Traffic Safety Administration study, more than 450,000 vehicles are sold each year with false odometer readings. This crime costs American car buyers more than $1 billion annually. Blockchain could virtually eliminate this as an issue and save new car owners significant money and impending stress.

Data Collection: The amount of data that is collected through an automobile’s life cycle (from production, to sale, to when a car is no longer operable) is worth millions of dollars. In the past, this data was never centralized and usually inaccurate with missing information over a period of years in an automobile’s “life.” Blockchain can reduce this friction point and develop into a potential revenue source (selling the data) for the automobile supply chain.


What are some additional ways blockchain will have an impact on the automobile supply chain? Meet us in the comments section with your thoughts.

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