Introduction
AutoLog is a startup company that will offer a digital logbook based on a block chain solution to store all data and history of a car; from mileage to car services, maintenance and repairs. Our objective is to provide a transparent and secure platform in order to improve vehicle information management and sharing across the industry.
At the beginning, the company will enter the German market, and once underway, the scope will expand to include other parts of Europe and Asia.
The Company and the management
The company will be located in Munich, the capital of Bavaria. The first reason is that many German car manufacturers are located in the south, around 26% of cars sold in Germany are produced in Bavaria (1).
The company is owned and managed by the six partners, Mira Mondo as Chief Executive Officer, Samra Dilshad as Chief Operating Officer, Beyza Cirit as Chief Financial Officer, Shakeeb Qazi as Chief Information Officer, Laura Alejandra Salinas Acosta as Chief Marketing Officer and Tayyab Hashmi as Chief Research and Development Officer.
R&D for Product/Service
AutLog business model primarily operates on Block chain as a service(Baas) whereby a software will be provided to the car manufacturers to be installed in the cars. It will only be installed in the new cars produced as they have the capability and sophisticated technology to integrate this service.
The important area to be considered is the extraction of the data from the cars. IoT is a relatively emerging technology in this area. With IoT it is possible to extract the relevant car data and store it on a platform. Our product leverages this technology in transmitting the data to the platform in order to maintain the human intervention to the bare minimum.
In terms of platform, a private block chain will be developed. A dashboard will be available for car manufacturers whereby they can view the mileage history and repairs and maintenance of the cars. A unique car ID will be assigned to each car for tracking purposes.
For the private sellers and dealers, an app will be available on both iOS and Android. Private sellers can share the certified car information with their prospective buyers. This information of mileage and repairs will be synchronized with the information available to car manufacturers in order to avoid any discrepancy
AutoLog's product development model follows agile methodology whereby we will continuously take input from our customers to tailor the product as per the customers needs and market development.
Market Analysis
One of the characteristics of the automotive industry is that it will be disrupted by the block chain technology. The revenue from the car manufacturers in Germany have been increasing during the last 5 years (2). As well as the revenue from car dealers in Germany (3). It can be inferred that there is a promising potential for this industry. (See Fig.1 and Fig.2)
Figure 1 Revenue of market of Second-Hand cars in Germnay
Figure 2 Revenue of new car market in Germany
Car manufacturers and car dealers are the potential customers. Therefore, the calculation of TAM, SAM and SOM was made on the total number of cars produced by car manufacturers.
There are three identified competitors. The first one is Blocko a Korean startup offering a block chain enterprise platform, one of their services are for car manufacturing companies. The next two are direct competitors. Vechain a european company, their main focus is on tracking the life cycle of the car by using block chain. Their service is limited to manufacturing companies. The third one is Carvertical, which is verifying the car's history by block chain, this company offers the solution to the drivers and works in collaboration with third parties, such as the police.
AutoLog’s competitive advantage is that it integrates the car manufacturer, car owners, car dealers and third parties all in one service. As AutoLog Team is based in Germany and there is no competitor in German Market, therefore, AutoLog’s first target is to capture German Market and then expand in Europe sequentially.
Sales and Marketing
AutoLog’s revenue stream comes from car manufacturers, car dealers and car users who want to sell their cars and receive an authorized form of car data for sharing purpose. Car Manufacturers are charged with subscription fee in return for Ease of Tracking Car Performance. Car Dealers are also charged with subscription fee and Car users are charged with one time data transfer fee in return for Fair Trade Immutable car history.
Pricing strategy is based on different price brackets for each customer group. Price brackets for Car Manufacturers is based on number of Cars Manufactured, for Car dealers is based on number of Cars sold and for car users there is a flat data transfer fee.
Financial data
AutoLog's main revenue streams are subscription fee from car manufacturers, subscription fee from car dealer and data transfer fee from private sellers. Subscription fee for car manufacturers is €200,00 , €450,000 and €600,000 for car volume respectively 0-200,000 , 200,001-400,000 and 400,000+. Subscription fee for car manufacturers is €300 , €500 and €650 for car volume respectively 0-200 , 201-400 and 400+. Data transfer fee is €3 for private sellers. Since increasing transaction volume is expected in coming years, the revenue volume is also increasing. According to our estimations, we start to get revenue in the 1st year from the car manufacturer side. The new produced cars, in which our technology is integrated, are supposed to be in the 2nd hand car market after 2 years. Therefore, we start getting revenue from dealers and individual car users in the 3rd year. In the 3rd year we are expecting to capture the 1% of our target market. In the 4th year, we estimate that our capture will increase by 3% and then by 2% in the 5th year. In the 1st and the 2nd year we are expecting € 206,250 and € 494,000 revenue from the car manufacturers. In the 3rd, 4th, 5th years we are expecting sharp increasing up to € 828,000 , € 1,497,000 , € 1,998,000 respectively with the data transfer fee and the subscription fee from the car dealers.
AutoLog's main cost items are initial platform cost, onboarding deployment cost, cloud cost, onboarding maintenance cost, salary and rent. We are estimating increasing trend in out cost structure as our total number of transaction increases. In the first year we are expecting € 517,000 total cost to initiate our operations. In the 1st and 2nd year, our total cost will decrease slightly respectively to € 412,460 and € 428,945. In the 3rd, 4th and 5th year our cost will increase to € 650,297, € 673,188 and €697,483, respectively with the increasing transaction volume.
After 2 years, 8 months we are expecting profit, which means that our break-even point is 2 year, 8 months. In this year and the 1st year, we are expecting € 517,000 and € 206,210 loss, while from the 2nd year we are expecting € 66,054, € 177,702, € 823,811, € 1,300,516 profit respectively
References
(1) https://www.invest-in-bavaria.com/en/range-of-sectors/automotive-industry.html
(2) Koptyug, Evgeniya . (2019). Total revenue generated by German automobile manufacturers from 2004 to 2017 (in billion euros). 12.12.2019, from Statista Website: https://www.statista.com/statistics/810360/german-automobile-manufacturers-revenue/
(3) Koptyug,Evgeniya . (2019). Revenue of the market for second-hand cars in Germany from 2000 to 2018 (in billion euros). 12.12.2019, from Statista website: https://www.statista.com/statistics/589610/revenue-used-cars-germany/
