JPMorgan’s wholesale car financing arm has filed a patent application to use blockchain to track the automobile inventory it finances for car dealers.
The application describes a distributed ledger-based version of floorplan lending, a revolving line of credit that allows car dealers to borrow against their retail inventory. The bank wants to tie each car’s individual vehicle identity number (VIN) to a blockchain that can get rid of any inefficiencies when it comes to auditing a dealer’s inventory.
“The floorplan lending process involves periodically doing a physical inspection or audit of all the inventory on the dealership’s lot,” Kevin Point, head of research and development at Chase Auto, said, according to CoinDesk. “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.”
There are millions of cars — new and used — sitting on floorplan lines of credit. Using blockchain to track them on a distributed ledger “will achieve cost savings over time. We believe these could be significant on an industry-wide basis,” said Point.
Christine Moy, blockchain lead at JPMorgan, revealed that a pilot is already being tested with dealership partners, and that the bank is speaking to automakers about the system, although she declined to name which ones.
“Not only is JPMorgan and Chase Auto seeking to solve its own problem, basically it will benefit the vehicular and equipment industry at large,” Moy said. “The Network of Assets is the foundation for this particular application and use case, but can also be the foundational piece for many other value-added applications and services for auto manufacturers, other banks and finance companies, and dealerships, related to devices with telematics connectivity.”
She added that the DLT system will also prevent…