Cyberattack on CDK Global Disrupts Auto Dealership Operations

Background of CDK Global

CDK Global, based in Hoffman Estates, Illinois, operates in over 15,000 retail locations across North America. The company provides a dealer management system (DMS) used for processing transactions, arranging financing, tracking parts and suppliers, and managing customer relations. In 2023, CDK Global was acquired by Brookfield Business Partners for nearly $6.5 billion.

The Cyberattack and Its Immediate Impact

On June 19, CDK Global experienced a significant cyberattack, leading to widespread system outages across dealerships in Canada and the US. The attack, attributed to the Eastern European group BlackSuit, involved a ransom demand of tens of millions. The disruption forced dealerships to revert to manual processes, severely impacting their operations.

Current State of Recovery

CDK Global has been working on restoring its services. As of the latest updates, a small group of dealers has been brought back online with the DMS. Efforts are ongoing to restore additional applications, including Customer Relationship Management (CRM) and service solutions.

Effects on Dealerships and Customers

The cyberattack has caused substantial disruptions at the retail level:

New Car Purchases: Delays in processing new car purchases and financing.
Service Departments: Vehicles stuck in service departments due to an inability to close repair orders without functioning systems.
Large dealership groups, such as AutoNation and Lithia Motors, have resorted to manual processes, resulting in lower productivity. Group 1 Automotive and other large dealerships are assessing the full impact of the outages.

Industry Reaction and Potential Long-term Consequences

Dealerships are considering alternative software providers due to CDK Global’s handling of the situation and communication issues. Poor car-buying experiences are likely to drive consumers to unaffected dealerships, impacting long-term customer loyalty.

Sales Projections and Economic Impact

The cyberattack is expected to result in lost sales for June, with projections dropping from 1.41 million to between 1.27 and 1.33 million units. However, these lost sales may be recovered in July, potentially affecting second-quarter sales figures for major automakers.

Conclusion

The cyberattack on CDK Global has significantly disrupted the automotive industry, highlighting the importance of robust cybersecurity measures. While recovery efforts are underway, the incident underscores the need for dealerships to prioritize security to protect their operations and customer data.