July 21, 2024
Industry News

Important Information about the Recent Car Dealer Software Hack

 

Struggling to purchase a car from a dealership or get your car serviced recently?

A cyberattack on CDK Global, a software provider used by thousands of dealers and service centers, is likely the reason for your troubles. The attack on June 19 has left dealerships in a state of chaos as they battle with malfunctioning computer systems.

Understanding CDK Global

CDK Global, headquartered in Hoffman Estates, Ill., operates in over 15,000 retail locations in North America. They provide software, including a “dealer management system” (DMS), which is crucial for dealers to process transactions, handle financing, manage parts and suppliers, and engage in customer relations, among other tasks.

Owned by Brookfield Business Partners (BPU), a Canadian private equity firm, CDK Global was acquired for nearly $6.5 billion in 2023.

The Cyberattack on CDK Global

Following system outages reported by numerous dealerships in Canada and the U.S., CDK Global disclosed that they had fallen victim to a cyberattack.

“CDK experienced a cyber incident,” the company stated to Yahoo Finance. They anticipate the recovery process to take several days and are working with clients on temporary solutions as they navigate through the disruption.

Notably, the attackers demanded a ransom for restoring services, with reports indicating that the group behind the attack, BlackSuit, based in Eastern Europe, sought tens of millions.

Shares of CDK Global’s parent company Brookfield declined by 5.7% in Canada following news of a second hack attempt post service restoration efforts.

Impacts on Dealers and Customers

The repercussions of the cyberattack are felt by dealers and customers alike.

Customers face delays in new car purchases and services, with some experiencing extended wait times. Dealers are unable to close repair orders or process transactions smoothly, leading to a challenging operational environment.

Major dealership groups like AutoNation and Lithia Motors are adapting to manual processes to continue serving customers amidst the system outage.

Group 1 Automotive and other dealership entities are also facing operational challenges due to the cyber incident, impacting their business operations.

Future Outlook for CDK Global

Dealerships relying on CDK Global’s nonfunctional DMS are exploring alternatives from providers like SAP, Reynolds and Reynolds, and Dominion Enterprises.

The lack of effective communication and support from CDK Global during the crisis has raised concerns among dealers, potentially leading them to seek alternative solutions.

Consumer experiences during this period may influence their future car-buying decisions, potentially favoring dealerships unaffected by the cyberattack.

The prolonged outage poses challenges for dealerships, impacting their operations and potentially resulting in financial implications.

Conclusion

The cyberattack on CDK Global has significantly disrupted dealership operations, causing inconvenience for dealers and customers alike. The ongoing challenges highlight the importance of cybersecurity in the automotive industry and the need for robust contingency plans to mitigate such incidents.

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