WIf you want to enter the security room on the third floor of the office building, you can only gain access with a special computer chip. Cameras monitor what is happening in the large room. The windows are also custom-made.
The glass panes are vapor-coated with metal on the inside. If a hole is cut in the window pane, it triggers an alarm. Sensors as intrusion alarms were not sufficient for the security requirements of the north German medium-sized company Kroschke. Some prisons are likely to be less secure.
The employees who work in this high-security wing are responsible for valuable documents and certificates. About 1.3 million vehicle letters are stored on this floor. In many cases, the clients are banks that finance a vehicle. As long as the loan for the car has not been paid off, the deed of ownership remains with the banks – and must be kept safe.
In yet other cabinets there are around 40,000 duplicate keys for rental cars that car rental companies entrust to the company. And in another part of the floor, the employees are currently printing vehicle registration documents for Tesla.
The forms come from the Bundesdruckerei, the documents are subject to strict bookkeeping. From the electric car manufacturer from California, Kroschke received the document order for all vehicles of the brand sold in Germany – and the order for Europe is to follow.
Six million license plates a year
However, Kroschke has a problem, because this work will become less in the future. More precisely, the proportion of manual labor will decrease. The third generation family business does the main business with the registration of vehicles.
No other provider has as many stamping points for vehicle license plates with around 400 shops, and no other company mints more than the company’s six million license plates per year. That corresponds to a market share of almost a third.
This niche business in medium-sized companies is a striking example of the necessity to change towards the digitization of work steps. For Kroschke, it’s about nothing less than long-term survival. The starting point is clear: for private buyers it is tedious to get an appointment at the registration office after buying a car, to take the day off and to have to present all documents accurately.
None of this is really necessary in times of online access, electronic administration and blockchain technology for data security. The aim of the medium-sized company from Ahrensburg is to be the first on the market with the digital vehicle file.
When it comes to digitizing administrative procedures, Germany is a diaspora. Countries like Estonia have long been showing that the step no longer has to be taken out of the house for car registration. The license plates, the physically necessary part of the registration, will then be sent by post.
In the Digital Quality of Life Index 2020 of the Internet service Surfshark, Germany only ranks 16th, far behind the leading countries Denmark, Sweden and Canada. The country does particularly poorly in the categories of digital infrastructure, internet affordability and internet quality.
Kroschke wants to become “PayPal of the car registration industry”
The two entrepreneurs have long been in Estonia’s capital Tallinn to get ideas for their business: Philipp and Felix Kroschke, two of six children of long-time company boss Christoph Kroschke. The brothers have taken over the management of the medium-sized company and are facing the far-reaching change. One is a business economist and is responsible for operations and sales, the other is a lawyer and is responsible for finances.
Together they want to make the company the PayPal for the car registration industry: Similar to what the online payment service did for internet purchases, Kroschke is to become a synonym for online car registration. “Just as car sales are shifting to the Internet, digital registration will follow,” says 43-year-old Philipp Kroschke. He believes that this is exactly what will happen in the next five to ten years.
In part, digitization already exists in this industry. For example, a private owner can deregister a car via an online service or re-register a vehicle after a break. The Federal Ministry of Transport designed the i-Kfz procedure for this purpose. Around two thirds of the nationwide counties could introduce it, but so far this digital solution has led a shadowy existence.
Experts complain that the process was far too cumbersome. In order to use the online service, the customer needs an electronic identity card with an online function, vehicle documents with a one-time code and, in some cases, a reader.
“The requirements like an ID card app are high. As long as car dealers are not able to use the system in a user-friendly way, the benefits and thus the usage are low, ”says 33-year-old Felix Kroschke.
In many places there are complaints about the slow digitization of the country. “Germany has set itself the goal of digitizing a total of 575 administrative processes by 2022 in the Online Access Act. At the moment, however, it is very uncertain whether this project can be achieved, ”says Michael Pfefferle from the Bitkom digital association.
There he heads the Smart City and Smart Region division. According to the Regulatory Control Council, only 75 of these administrative processes have so far been digitized. “The fact that things are progressing so slowly is also due to the fact that responsibility is constantly being shifted back and forth between Berlin and the federal states and municipalities,” says Pfefferle.
According to a survey by Bitkom, there is a lack of money in the municipalities, uniform guidelines and standards from the federal government and technical support from the federal states, for example. “The main problem is that digital identification and authentication are not offered when dealing with authorities,” says Pfefferle.
The so-called written form requirement, which still requires a signature for an application to the authorities, is an enormous obstacle to the digitization of services. “The laws in Germany are not made for digital space,” says Pfefferle.
Identification is essential
However, in the long term, labeling will probably be necessary in mobility and individual transport. Whether it concerns a fine, prosecution or insurance and vehicle tax – the identification of the car and driver is essential in many places.
“There must always be a clearly verifiable marriage between the owner and the vehicle,” says Philipp Kroschke. But this is also feasible without a classic license plate. Experts speak of visual identification.
Special stickers on the windshield, so-called RFID chips or NFC technology, can carry out this identification. Cameras or sensors on the streets could then read out such information.
Kroschke is currently testing such solutions in a project. The client is the West African state of Ivory Coast. The technology is intended to prevent vehicle theft and control access to certain areas. The north German company holds patents for parts of it.
The medium-sized company has taken over a fleet management system based on digital technology for the VW subsidiary Moia, which has a driving service based on autonomous driving. “Fully autonomous driving will replace the license plate in maybe 20 years. As soon as vehicles can identify and communicate with each other, this will be possible, ”says Felix Kroschke. Its own area of information technology now has 60 employees, including experts from India.
However, the main business is still vehicle registration; for around one million private customers every year, the company takes care of the administrative procedures for a total price of currently 139 euros. There are also orders from business customers such as car dealers, car rental companies, leasing companies and banks.
With the landlords, the company “had to give up”, as junior boss Philipp Kroschke says. Other providers have undercut the prices of the Ahrensburg company and have won customers. The promising business comes from online trading. “We talk to all dealers, internet platforms and start-ups who sell cars online,” says Felix Kroschke.
Bottlenecks in new cars
In the Corona year 2020, the main approval season, spring, was almost canceled for Kroschke. Locations for stamping the license plates were closed for months, mostly in the immediate vicinity of the registration office.
Most of the 1900 employees were on short-time work. At the end of the year, sales were just under 100 million euros and thus six percent below the record year 2019. According to the information, the new year got off to a better start, but now bottlenecks in new vehicles are causing growth limits.
Kroschke does not name winning numbers. The company is “highly profitable”, the operating return on sales is in the double-digit percentage range, they say. In addition to Kroschke, there are many small providers in the industry, larger companies among them are PS-Team, Tönjes or EHA Autoschilder.
The trend for the family company founded in 1957 is foreseeable: In the coming years the number of “booths” at the registration offices for stamping the license plates will decrease. And this will also reduce employment in the area of currently around 1,100 employees.
On the other hand, information technology and the management and maintenance of data are being expanded – but not to the same extent and often with different professional qualifications. Instead of the “sign maker”, Kroschke sees himself as a data collection center in a few years’ time. Internationalization should help to withstand change. The aim is to set up a digital registration business in ten European countries by 2024.
The license plate is already being dispensed with elsewhere. In California and the United Arab Emirates there are trials with luminous license plates in which electronic displays replace metal signs.
It is questionable whether German authorities would allow this visual identification. They prefer to take care of letters. There are currently plans in rural districts to ban the double “X” in the license plate. Allegedly, the cameras in speed control devices cannot read the characters correctly.
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