##The Impact of Cyberattacks on Auto Retailers and Customers
###Cyberattacks Disrupt CDK Global, Affecting Thousands of Auto Retailers
CDK Global, a software provider to around 15,000 dealers across the US and Canada, has recently experienced debilitating cyberattacks. These attacks began on June 19, coinciding with a federal holiday in the US and caused a temporary shutdown of CDK’s systems. The company has warned that a second incident is likely to keep their systems down for several more days. As a result, both auto retailers and their customers are facing significant challenges and disruptions.
###The Crippling Effect on the Auto Retail Industry
The cyberattacks on CDK Global have had a crippling effect on the auto retail industry. This industry generated over $1.2 trillion in sales in the US alone last year. CDK’s core product, a suite of software tools known as a dealership management system (DMS), plays a crucial role in the day-to-day operations of auto retailers. It enables them to handle financing, insurance, vehicle and parts inventory management, as well as completing sales and repairs. With only a few DMS providers available due to industry consolidation, thousands of retailers heavily rely on these select software companies.
###Stocks Plummet for Dealerships and CDK’s Parent Company
The impact of the cyberattacks is not limited to auto retailers and their customers; it has also affected the stock market. CDK’s parent company, Brookfield Business Partners LP, experienced its worst trading day since October, with shares plunging by 5.7% on Thursday. Major dealer groups like AutoNation Inc., Group 1 Automotive Inc., Sonic Automotive Inc., and Lithia Motors Inc. also saw drops in their stock prices.
###Challenges Faced by Customers
Customers are facing various challenges due to CDK’s system outage. Joshua Adams, a Jeep owner from Alabama, has already been waiting for weeks to have his 2020 Renegade SUV repaired under warranty. The cyberattacks have further delayed the process, with the dealership unable to provide updates on when the necessary part will arrive. This delay not only inconveniences Adams but also results in additional expenses for a rental car.
The Lanni family from New Jersey had been eagerly anticipating the delivery of their new Audi Q5. However, their excitement was dampened when their dealer informed them that the computer system was down due to the cyberattacks. As a result, they are still uncertain about when they can take delivery, leaving their children disappointed and curious about the delay.
###Auto Retailers Struggling to Process Transactions
Apart from customers, auto retailers are also facing significant obstacles. Alex Padron, a sales manager at a Nissan dealership in Phoenix, revealed that the business was almost at a standstill due to CDK’s system outage. Since 2014, the dealership has relied on CDK’s software, and all customer data is stored in the system. With the software temporarily unavailable, they have resorted to handwriting paper contracts and finding alternative ways to complete deals. However, processing transactions has become challenging, especially for complicated purchases involving trade-ins or unusual financing.
Padron explained that the finance department has had to rely on guesswork to assess customers’ creditworthiness based on limited available information. As a result, the dealership has been able to process only around half of its usual transactions. The inability to complete deals efficiently has directly impacted the dealership’s daily performance and revenue.
In conclusion, the recent cyberattacks on CDK Global have had far-reaching implications for both auto retailers and customers alike. The disruption of CDK’s systems, which serve as a vital backbone for dealerships, has caused delays in vehicle repairs, delivery, and financial transactions. It has also resulted in financial losses for auto retailers and their parent companies. The industry’s heavy reliance on a few software providers highlights the vulnerability of the auto retail sector to cyber threats.
