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CDK hack upends U.S. auto industry, sending dealers back to paper forms

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CDK HACK UPENDS U.S. AUTO INDUSTRY, SENDING DEALERS BACK TO PAPER FORMS

AutoNation, a leading auto retailer in the U.S., said the outage was disruptive
and had adversely affected its business, though its outlets remain open,
continuing to sell, service and buy vehicles.
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Cyberattacks stall business at car dealerships nationwide
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June 24, 2024, 9:09 PM GMT+2 / Source: Reuters
By Reuters

U.S. auto dealers grappled with an ongoing cyber attack-led software outage on
Monday, with some reverting to manual paperwork as car industry technology
provider CDK worked to restore systems used by more than 15,000 retail
locations.

The outage impacting CDK’s dealer management system, used to complete deals,
track store profitability and monitor employee compensation, has “plunged the
auto retail industry into disarray”, JPMorgan analysts said last week.




AutoNation, a leading auto retailer in the U.S., said the outage was disruptive
and had adversely impacted its business, though its outlets remain open,
continuing to sell, service, and buy vehicles.

Peer Lithia Motors said on Monday it had experienced disruptions in its
CDK-hosted system in North America, and that the incident was likely to have a
negative impact on its business operations till the systems are fully restored.

Jim Seavitt, owner of Village Ford dealership in Dearborn, Michigan, said the
outage has so far not dampened sales, but it has made the process of getting
cars to customers more laborious.

The dealership sold nearly 100 cars during a large sale it put on last week,
Seavitt said, but because CDK generates the paperwork needed to formally pass
the car off to the customer, those vehicles are in limbo.



Seavitt expects the vehicles to be transferred this week after his team
developed other ways to complete the necessary paperwork. CDK has told him that
services will likely be down until mid-week.

“We don’t want to see this thing drag on,” Seavitt said.

CDK, which reported the outage last week, said on Monday it had begun the
restoration process, reiterating that it will take several days to complete.


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AutoNation and peer Group 1 Automotive said they were using alternative
processes such as manual paperwork to conduct their business. Both said they had
taken precautionary steps to protect their data.

“The timing of the restoration of other impacted CDK applications remains
unclear at this time,” Group 1 said in a statement.

Bloomberg News reported on Friday that a group of hackers claiming
responsibility for the attack on CDK’s software systems had demanded millions of
dollars in ransom to put an end to the hack.



Seavitt said he hopes CDK pays the ransom so dealers can resume business as
usual.

Though auto retailers have not outlined any sales hit, analysts have flagged a
possible impact. “We note some potential risk to late-June (U.S. auto sales)
volume from the reported CDK dealer disruptions,” Citi analysts said in a note
last week.

Auto retailer Sonic Automotive last week said the CDK outage was likely to have
a negative impact on its business operations until the systems were fully
restored.


Reuters

Reuters



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