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Cyberattack Cripples Auto Dealerships in North America
Dealerships across the US and Canada are grappling with significant disruptions following debilitating cyberattacks on CDK Global, a key software provider serving around 15,000 dealers. These attacks began on June 19, significantly impacting business during a crucial federal holiday and intensifying an already challenging end-of-quarter sales push. CDK has issued warnings that a second incident could prolong system outages for several more days.
CDK Global supplies a dealership management system (DMS) that is essential to the daily operations of auto retailers, including tasks like financing, insurance, inventory management, sales, and repairs. The industry, which generated over $1.2 trillion in sales in the US last year, is now facing significant delays and manual processing issues owing to the system's downtime.
Impact on the Automotive Sector
The parent company of CDK, Brookfield Business Partners LP, experienced a sharp decline in trading, with shares plummeting 5.7% last Thursday and continuing to fall on Friday. Other affected dealership groups, such as AutoNation Inc., Group 1 Automotive Inc., and Sonic Automotive Inc., also saw their shares slide.
Representatives from Ford, Volkswagen, Mercedes-Benz, and BMW confirmed that some of their dealers utilize CDK’s software and noted they are working with those impacted. Other car manufacturers have yet to comment on the situation.
Dealership Operations Disrupted
Joshua Adams from Millbrook, Alabama, owner of a 2020 Jeep Renegade, has been particularly impacted. Already weeks into waiting for a warranty claim to be processed, he called his dealership to inquire about the arrival of a crucial part. Due to the cyberattack, the service center had no information. “They can’t tell me where my part is or when it will arrive,” Adams lamented, noting that the delay is adding to his rental car costs.
Customers Left Waiting
A similar story unfolds for the Lanni family in New Jersey, anticipating their new Audi Q5. Ready to switch their child seats to the new vehicle, they were informed on June 19 that their dealership's computer systems were down. Days later, they continue to await further updates from the dealer. “The kids were really excited,” said Daniel Lanni, expressing the family’s frustration. “Now they’re just regularly asking about it.”
Manual Practices and Business Slowdowns
In Phoenix, a Nissan dealership managed by Alex Padron is experiencing what he terms “almost at a standstill” operations. With data for over 50,000 customers stored in CDK’s system since 2014, the dealership is now resorting to handwritten paper contracts. Their finance department is making educated guesses on customers’ creditworthiness based on whatever information they can scrape together. Since the attacks began, the dealership has managed to process roughly half their usual volume of transactions, struggling particularly with complex deals involving trade-ins or unique financing. “For this store, I’d like to have 10 complete deals done a day,” Padron said, though current circumstances mean achieving even five transactions is challenging.
The cyberattacks on CDK Global have significantly crippled automotive operations across North America, causing delays, additional expenses, and widespread frustration for both dealerships and their customers.
