A blockchain can help a company keep track of the automobile inventory which it finances for car dealers. Well, at least this is what JPMorgan will do – tracking automobiles with its private blockchain and preventing them from pledging the same cars for different loans.
The wholesale car financing arm of the bank recently filed a patent application describing a distributed-ledger based version of floorplan lending which features a revolving line of credit, allowing car dealers to borrow against retail inventory.
Every car which will be sold in the US has an individual vehicle identity number (VIN) and the bank reckons that these can be easily anchored to a blockchain, assisted by a range of other telematic and geolocation sensors. All of these will function together to remove inefficient manual pain points around the auditing inventory on the dealership floor.
The news that JPMorgan will track cars with its private blockchain were confirmed by Kevin Point, the head of research and development at Chase Auto. He described the process in detail and said:
“The floorplan lending process involves periodically doing a physical inspection or audit of all the inventory on the dealership’s lot. That means that a human being actually travels to the dealership, identifies the vehicles and then reconciles that inventory, if the loan’s outstanding, on both the dealer’s and the bank’s accounting system.”
What’s interesting is the move by banks like JPMorgan which have been busy testing and building blockchain systems for the last couple of years. As the blockchain news now show, they are now clearly looking for practical opportunities which will see their bottom line improved by the tech.
JPMorgan will track a fraction of the 17 million new cars sold each year in the US, according to Point. When you add in the used vehicles, there are many millions sitting on floorplan lines of credit.
The move is also featured in the Ethereum news because it is slightly a departure for the Quorum blockchain, a private variant of Ethereum which was developed by JPMorgan. Previously, the main use of Quorum was for abstract financial operations, debt issuance or linked payment networks.
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