A cyber attack targeting CDK, a crucial technology provider for over 15,000 U.S. auto dealerships, has caused widespread software outages, forcing many dealers to resort to manual processes.
The outage, affecting CDK’s dealer management system essential for deal completion, profit tracking, and employee compensation monitoring, has significantly slowed down operations across the auto retail industry, according to Cliff Steinhauer from The National Cybersecurity Alliance.
Security firm Recorded Future attributed the attack to a group named BlackSuit, although CDK has not officially confirmed this detail. CDK acknowledged the outage last week and stated that restoration efforts are underway, expected to take several days.
Market research firm Cox Automotive suggested that the impact of the attack might be less severe than anticipated, with most sales expected to rebound in July. However, major auto dealers like AutoNation and Lithia Motors reported disruptions, highlighting adverse impacts on their business operations until full system recovery.
Jim Seavitt, owner of Village Ford dealership, noted that while sales remained strong during recent promotions, the outage complicated vehicle deliveries as CDK handles necessary paperwork. Despite developing alternative processes, Seavitt expressed concerns over prolonged service disruptions.
AutoNation and Group 1 Automotive disclosed their adoption of manual procedures to mitigate the impact, emphasizing data protection measures amidst uncertainties about the timeline for full system restoration.
Asbury Automotive and Sonic Automotive also acknowledged operational challenges due to the outage, with ongoing assessments to determine the extent of the incident’s impact, including potential data access concerns.
According to Bloomberg News, the hackers behind the attack reportedly demanded a significant ransom from CDK to halt the breach, underscoring the potential financial implications for affected dealerships.
Analysts from Citi flagged potential risks to U.S. auto sales volume in late June due to the CDK disruptions, noting the uncertainty surrounding the resolution timeline and its broader market implications.
In June last year, total new vehicle retail sales in the United States reached 1.1 million units, according to data from industry consultants J.D. Power and GlobalData, illustrating the scale of the industry potentially impacted by the ongoing cyber incident.
