A majority of global automotive sector executives believe that blockchain technology will become a disruptive force in the industry within the next three years, according to a study.
Although the industry is still in very early stages of adopting the technology, the study by IBM Institute for Business Value in collaboration with Oxford Economics said blockchain has the potential to strengthen trust and collaboration among businesses, consumers and even vehicles.
Blockchain is a distributed ledger technology offering a more transparent and secure way to conduct business with information held on a blockchain existing as a shared and continually reconciled database.
As many as 62 per cent of surveyed executives say blockchain will be a disruptive force in the automotive industry within three years, the study said.
Moreover, 54 per cent of surveyed executives expect new business models to influence investments in blockchain, whereas 54 per cent of auto pioneers (companies which have adopted the technology) will implement their first commercial blockchain network at scale within the next three years, it added.
The study surveyed 1,314 automotive executives across 10 functional areas and 10 countries, including India
"As blockchain networks begin to engage and integrate with other business networks, opportunities to provide new services and generate new revenue streams will emerge," the study said.
By overcoming constraints of technical challenges of storing, processing, sharing and analysing data, blockchain can shift information paradigm from error-prone to value-add, it said.
With information shared by all participants instead of having individual, or private version through blockchain, "information becomes a lifetime history of an asset (such as a vehicle) or transaction and is transparent to all", it added.
According to the study, the executives surveyed believe that blockchain can have a high impact on improving information friction points faced by the automotive industry.
"Fifty-five per cent of OEMs and 47 per cent of suppliers say implementing blockchain will improve imperfect information in their business networks," it said.
Moreover, 52 per cent of original equipment manufacturers (OEMs) and 40 per cent of suppliers felt that information risks can be improved.
It further said 43 per cent of OEMs and 29 per cent of suppliers felt blockchain would improve the ability to access information needed for a particular transaction.
The automotive executives also saw opportunities for improvements in key functional areas affected by information frictions, it said.
"The global data clearly revealed finance, supply chain and mobility services as top areas where blockchain could reduce frictions," the report said.
However, when looked at data by country, it was found that aftersales was among the high-rated areas for OEMs in China, Germany and Mexico.
As the automotive industry is in the very early stages of implementing blockchain at commercial scale, only a small portion of executives say their organisation is ready, according to the study.
"Part of the issue is that many executives lack a general understanding of their organisations' blockchain strategies," it said, adding 39 per cent of OEM and 51 per cent of supplier respondents were only slightly aware of strategies.
The ability of blockchain to overcome regulatory constraints concerns 42 per cent of OEMs and 33 per cent of suppliers, it added