Cyber Attack on CDK Global Costs Dealers Over Billion in Lost Sales

A recent cyberattack on CDK Global, a major provider of dealership software, has had a significant impact on the automotive industry. The attack, which began on June 19th and forced CDK to shut down most of its systems across the country, left about half of the nation's car dealerships struggling to operate, with some reverting to pen-and-paper methods. The resulting loss in sales could have cost dealers more than a billion dollars, according to a new study.

Dealerships Grapple with the Aftermath of the Cyberattack

Widespread Disruption and Losses

The cyberattack on CDK Global left dealerships across America without access to their computer systems for nearly three weeks, from June 19th to July 5th. This forced many dealerships to revert to manual, paper-based processes, significantly slowing down their operations and sales. According to the Detroit Free Press, the group behind the attack demanded tens of millions of dollars in ransom to end the disruption.The impact of the outage was substantial. J.D. Power and GlobalData forecast that U.S. retail sales in June across all automakers would be about 5.4% lower than in June 2023. The Anderson Economic Group, in a revised estimate, now believes that the total direct losses to car dealers during the three-week period of the cyberattack reached .02 billion.

Potential Long-Term Consequences

While some of the lost sales may be made up in the weeks following the attack, as customers who postponed their purchases return to dealerships, the situation is not that simple. The Free Press warns that not every sale lost during the outage will be recovered, as some customers may "postpone indefinitely" their new car purchases or choose to go to a different dealer that was not affected by the cyberattack.The damage to the reputation of the dealerships affected by the cyberattack could also have long-lasting consequences. Customers may be hesitant to do business with these dealerships, fearing that their personal and financial information could be at risk. This could lead to a further decline in sales and a lasting impact on the industry.

Lessons Learned and Cybersecurity Concerns

The CDK Global cyberattack serves as a stark reminder of the importance of robust cybersecurity measures in the automotive industry. As dealerships and software providers become increasingly reliant on technology, they must prioritize the protection of their systems and data to prevent similar disruptions in the future.The incident also highlights the need for the industry to work closely with cybersecurity experts and government agencies to develop comprehensive strategies to mitigate the risk of cyberattacks. This may include implementing advanced security protocols, conducting regular risk assessments, and ensuring that all employees are trained in cybersecurity best practices.Furthermore, the automotive industry must consider the broader implications of such attacks, including the potential impact on consumer confidence and the overall health of the sector. By taking proactive steps to enhance cybersecurity and strengthen resilience, dealerships and software providers can better protect themselves and their customers from the devastating consequences of a successful cyberattack.