While EU legislation slated for 2018 will make the practice illegal in that jurisdiction, laws are unlikely to solve the problem. For starters, EU legislation will only affect EU member states, which accounted for less than 18% of global car sales in 2016, according to Macquarie Research, and is likely to not affect a post-Brexit UK at all.
Furthermore, China still dominates global vehicle sales; with continued (if more moderate) growth forecast there and in emerging markets where clocking is rife (including Brazil, India, Mexico and Russia) it is likely that the practice will continue.
Indeed, it is highly likely that legislative change will simply push the practice underground, if the United States is any example. Odometer fraud is a felony offense in the US, but the National Highway Traffic Safety Administration estimates that it is still a $1 billion problem. If clocking is big business, its implications are even bigger. While it is relatively simple to assess how much more a car is worth with 50,000 miles less on the clock, what’s more difficult to quantify is the impact on safety that the fraud has.
How many vehicles did not receive the required level of service to maintain a safe level of operation, and were involved in accidents as a result? How much damage did they do to other vehicles and property? What personal injury was caused, and what sums will account for the loss of health, including lost income?
How do you quantify the impact it may have on financial institutions, who could be making lending decisions based on factors that include mileage? And wrapping around all the parties are the insurance companies, who not only assess the risk of each of these situations, but then assign correspondingly high premiums to mitigate it. What is the cost of processing these claims?
In truth, a quantitative figure can be arrived at (with some considerable effort). But then, how do you quantify the loss of trust? The opacity of current operations means that automotive manufacturers, dealers, workshops, lenders, insurers and consumers are all suspicious in their dealings with each other. Rebuilding trust amongst so many different parties is critical - but it feels like an almost insurmountable problem.
What is clear is that we need a new solution to this considerable problem. One that is not vulnerable to fraud, that makes maintenance data and odometer readings tamper-proof, and that builds trust amongst all parties involved with a vehicle by providing data transparency.
Blockchain technology provides that solution. It is a newer technology that is secure and tamper-proof enough for financial transactions, and that has already proven its technical robustness across a range of industries.
How can blockchain stamp out clocking? By creating a decentralised digital maintenance logbook for each vehicle. Such a virtual logbook would contain far more than usual vehicle maintenance information you would expect - because it would contain all of it.
Instead of dealers, workshops and owners maintaining their own separate systems, they are each granted access to the individual vehicle’s unique blockchain. This access, granted via secure private keys, also determines the individual participant’s level of access to the data.
To view the logbook or make an update, the participant accesses the logbook via a smartphone app. Each update is both time-stamped and hard-coded in, meaning it isn’t possible to erase or tamper with past updates. Furthermore, each participant’s unique key ensures that they can only access and make updates that are appropriate to their role, further eliminating the possibility of fraudulent use.
Data updates in the digital logbook in real time, meaning it is never out-of-date, and there is no need to call or email anyone to request or verify records. And when it comes time for the owner or dealer to sell a vehicle, they have immediate access to the vehicle’s full maintenance history and odometer readings, making it simple and convenient for prospective buyers to check this information against the vehicle sitting in front of them.
Such a high level of transparency deepens the sense of trust between dealers, workshops and owners: with every repair, replacement and reading logged, there’s little chance of fraud occurring. For prospective buyers, such meticulous record-keeping also creates a valuable sense of trust - they know what they are buying, because they can see the full records.
In the not-too-distant future, the blockchain-enabled vehicle logbook will be the default standard in the automotive industry. It will not only create a sense of trust and transparency - it will also make it increasingly difficult to engage in practices such as car clocking.
In a recent VeChain pilot with Groupe Renault, the new digital car maintenance book successfully gathered all information to make it accessible to the vehicle’s owner, and was judged to be a more transparent, trust-building means of providing the data to prospective buyers.
Of course, blockchain will not automatically stamp out all dishonest and fraudulent behaviour - the onus is still on humanity to use the technology. But the vast majority of automotive manufacturers, dealers, workshops and even consumers are honest.
Adopting blockchain-enabled vehicle logbooks will bring additional benefits of transparency and convenience, and will significantly increase trust amongst honest operators. In contrast, dishonest operators will be conspicuous by their failure to participate in blockchain-enabled vehicle logbooks, making it easier to identify who not to trust - but rather to avoid entirely.
Sunny Lu is co-founder and CEO of Vechain.