Blockchain extras could boost automotive revenues by £90 billion

13 February 2019 Consultancy.uk

New research has found that Blockchain could enable the automotive industry to create a global market for ‘extras’ of over £90 billion in the next decade. The study found that drivers would be willing to pay extra to have services including traffic congestion management and automated payments. 

While blockchain technology continues to be viewed as a key piece of future infrastructure across many industries, corporations have recently been cautioned against it being viewed as a silver bullet. According to several recent studies, the volume of trade via blockchain has often been negligible to date, while a critical mass of use may be some way off, meaning the realisation of what its true potential is has yet to materialise.

At the same time, the coming decades are forecast to see hundreds of millions of consumers investing in connected cars. Drivers are thought to be broadly positive about a host of digital features in the cars of the future, with many willing to pay upfront for dignostics features, navigation services, emergency and maintenance services.Traffic congestion management and protected data access lead the pack

The automotive sphere presents a major opportunity for blockchain technology, in this sense, as it provides a market seemingly ripe for disruption at a time when a number of reports have suggested the early hype surrounding shared digital ledgers may have begun to die down. To that end, a new study from strategy and marketing consultancy Simon-Kucher & Partners has found that blockchain is indeed edging its way into the automotive sector.

Of the possible services on offer by Simon-Kucher’s reckoning, survey participants said they were particularly interested in time-saving solutions. However, applications that reward good road behaviour, such as by offering adapted insurance rates for safe driving were also popular, with 11.7% citing this, or financial incentives for particularly ecofriendly driving, noted by 10.3% percent.

Paying extra

On top of this, car owners are so interested in the many ways in which blockchain can improve their experience behind the wheel, Simon-Kucher’s study revealed that many would actually be willing to pay extra for a number of blockchain-based services for their cars. At 27%, more than a quarter of participants said they would pay £8.80 every month for traffic congestion management services. Meanwhile 7% would pay £8.40 for protected data access and 12% would invest £6.30 for the remote control of vehicle, including locking/unlocking.

17% said that the hassle involved in paying out money for parking services, electric charging stations or toll areas would be worth paying automotive companies to deal with via automated payments, at a rate of £5.00. Finally, when buying a used car, 7% of consumers said they would pay as much as £4.40 for a blockchain-based system to provide the immutability of a vehicle‘s records, supplying its MOT data, proof of purchase and mechanical records in the process.

Blockchain applications are expected to become an important source of OEM revenues

On this basis, the total global revenue generated by 2030 for these extras could well hit the £91 billion mark, or €104 billion per year. Of that, some £32.81 billion (€37.4 billion) will be spent by consumers in Europe, representing the second largest potential market for the automotive monetisation of blockchain services.

Antoine Weill, a Partner in Simon-Kucher’s global Automotive practice, said of the findings, “The added value of blockchain applications for the end customer is obvious. Car manufacturers need to bear in mind that they can generate significant profit from these applications... The automotive industry should start adjusting its strategies and business models now, not only to expand their current offerings with blockchain solutions, but also to monetise them.”

UK Partner Dr. Peter Colman added, “This makes it clear that manufacturers can drive topline growth by investing in digitalisation. Every manufacturer should have a digital plan, but too often that plan is all about the technology. Manufacturers need to remember that ultimately it has to be about monetization, and how you make money! As such, blockchain solutions offer an interesting and innovative new approach.” 

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