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Widespread Outages Hit US Auto Dealers After Cyberattack at CDK Global
Auto retailers across the United States are experiencing significant disruptions following a major cyberattack on CDK Global, the primary software provider for thousands of dealerships. The company announced the breach late Wednesday, prompting a shutdown of most systems that is expected to last several days. Thousands of dealerships are affected, leaving them unable to conduct transactions, access customer records, schedule appointments, or deal with car-repair orders.
No Immediate Resolution in Sight
In a communication to customers, CDK Global indicated it has no estimated time frame for resolution. The company serves almost 15,000 dealerships, affecting everyone from front-office employees to parts-and-service shops. This outage has also impacted hundreds of dealerships in Canada, forcing them to revert to pen and paper to handle transactions. These transactions will need to be logged digitally once systems are restored, indicating a prolonged period of recovery.
Market Reaction and Dealer Sentiment
Market response has been swift, with shares of major publicly listed dealership groups such as AutoNation Inc., Lithia Motors Inc., Group 1 Automotive Inc., and Sonic Automotive Inc. all seeing declines. Notably, AutoNation dropped as much as 4.6% in intraday trading. Dealerships have reported varying levels of impact, with some indicating complete disruption and others experiencing intermittent issues despite using systems from CDK competitors like Reynolds & Reynolds Co. and Dealertrack.
Operational Struggles at the Dealership Level
Dealers like Greg Thornton, who manages a group in Frederick, Maryland, suffered from early Wednesday morning when their CDK customer-relations software went down. Similarly, Open Road Auto Group’s dealerships in New York and New Jersey reported being unable to deliver new vehicles because of disruptions in CDK services that link to state motor-vehicle departments. This has blocked essential procedures like titling and registration.
Despite these challenges, some dealerships have managed to continue operations through workarounds. Sam Pack’s Five Star Chevrolet near Dallas managed to sell four vehicles by using paper for some tasks. However, critical parts of transactions, such as obtaining titles, remain impeded.
Industry Response and Proactive Measures
Industry bodies such as the National Automobile Dealers Association are actively seeking information from CDK to understand the cyber incident's scope and nature. Stakeholders have voiced frustration, calling for better precautions from CDK to prevent such extensive disruptions.
The cyberattack at CDK Global highlights vulnerabilities within the auto retail sector and raises questions about the preparedness of essential service providers. As CDK works to resolve the issue, the ripple effects continue to strain dealerships across North America.
