Can NFTs and blockchain help you buy or sell a used car?
When selling a used car, good documentation is the golden ticket to maintaining the second-hand value.
This means having logs that show when and where a car was serviced, and whether any important services or checks were carried out.
That might sound like a concern for classic car buyers looking for provenance, but even new cars seem to be concerned about resale values. Consider the upcoming 2023 Alfa Romeo Tonale, which includes the first standard non-fungible token (NFT).
Now, NFTs carry a stigma due to people spending loads of money on what is essentially a special digital collectible, but Alfa Romeo wants to use this technology to help owners manage resale value. Bad documentation can kill as much as 20 percent of a car’s resale value, so these NFTs will record vehicle data and then generate a certificate to assure a potential buyer that the car has been well maintained.
Both buyer and seller can benefit from this technology: the buyer gets peace of mind that the car won’t be a lemon, while the seller uses NFT as a way to protect and record the car’s life, to ensure it earns maximum value on the market.
Now, we still have to see how all this plays out in person, considering that the new Alfa Romeo Tonale hasn’t hit the road yet, and neither has the used car market. However, the Italian automaker is not the first to show this idea.
The engine chain is a third-party solution that gives car owners and enthusiasts the opportunity to do what Alfa Romeo suggests. Car owners subscribe to the service and pay 50 euros a year per vehicle they want on the service.
Owners must verify their identity and then provide accurate documentation of their vehicle. Information such as make, model, year, chassis number and VIN must be verified before Motorkjeden creates an NFT on its private blockchain.
The owner of the car owns the NFT, but when a service is carried out or checked, or changes are made to the car, the workshop can include this information on the NFT, maintaining the level of documentation for the vehicle. The stores are the only ones who can make these changes, which means that the documentation is irrefutable and immutable. So far, only half a dozen stores have signed up for the service.
Julio Sainz, the founder of The Motor Chain, said that the idea for this platform came to him when he bought a 1977 Ferrari. The car was an hour away, and he had to drive back and forth to the owner three times before he agreed to buy.
He said that while performing a pre-purchase inspection (a must when buying a used car, regardless of pedigree) he found a huge envelope loaded to the brim with documentation. While the documentation was good (probably leading him to buy his new stallion), it was disorganized, fragile and messy.
The motor chain started with classic cars and collector cars that contains communities devoted to the preservation, conservation and documentation of cars, although the founder assured me that there are also many modern vehicles on his platform. He is looking forward to having motorcycles on the platform as well.
With thousands of NFTs on the platform, Sainz said the whole model is about trust. It’s not just the owner who says “this car is good”, but everyone involved in the car’s history says so too. Furthermore, these endorsements cannot be changed completely on purpose since they are checked, screened and proven. Cars on the platform have won awards at car shows for being the best documented, showing the confidence and enthusiasm for the solution.
But hasn’t all this been done before? We bring VINs to Carfax to see if the car has been in a major or minor accident, which helps us understand and negotiate value. Sometimes there are odd gaps or poorly explained services in these records that force a mild conflict when the buyer questions the seller about that concern and demands a document to support their explanation, and this is where technology can take over.
Blockchain and NFTs can help verify and organize these records, but it requires buy-in. Owners must subscribe, workshops must participate, and buyers must take over the NFT after purchase, meaning they’ve bought not just a car, but a digital envelope full of service documents that require an ongoing charge. Especially when it comes to cars, every little expense adds up, so it will be interesting to see how or if this method of record keeping gains mainstream adoption.
