(Source – Automotive News)
CDK Global, a leading provider of technology to car dealerships across the U.S., announced that it has restored systems for a small group of dealers following a significant hacking incident last week. The company, which later referred to the incident as a “ransom event,” is gradually bringing its services back online.
In a statement to CBS MoneyWatch on Wednesday, CDK Global said, “We have successfully brought a small initial test group of dealers to live on the Dealer Management System (DMS), and once validation is complete, we will begin phasing in other dealers.” The company did not specify the number of dealerships included in the initial group. Additionally, CDK is working to restore other critical applications, including Customer Relationship Management (CRM) and Service solutions, along with their Customer Care channels.
Impact on Dealership Operations
The cyberattack has significantly disrupted operations for many dealerships. Geoffrey Pohanka, chairman of Pohanka Automotive Group in Capitol Heights, Maryland, reported that his business is not among those whose systems have been restored. Pohanka’s dealerships have been relying on manual processes for over a week, severely hampering their ability to manage sales, inventory, and customer relationships.
“We are still doing workarounds, using a paper processing system,” Pohanka explained. “The problem is we can’t load this data back into the system. We can account for the work we did in our general ledger from a financial statement standpoint, but it’s very hard to pop all this data back into the system so you can have access to it later.”
CDK Global had previously advised dealers not to expect full system restoration by the end of June. In a recorded message and a memo sent to dealerships on Tuesday, the company stated, “We do feel it’s important to share that we do not believe we will be able to get all dealers live prior to June 30.”
Pohanka is hopeful that his dealer management system will be operational by the first week of July. “We have to close out each month with manufacturers, and it’s going to be hard if it’s not operating within the first week of the month,” he said. “But we’ll figure it out, we don’t have a choice.”
Broader Market Implications
The outage is having broader implications for the automotive market. Data analytics firm J.D. Power forecasted a decrease in new vehicle retail sales for June by up to 8.2% compared to the same month last year. This dip is attributed to the CDK outage rather than a decline in consumer demand. Thomas King, president of data and analytics at J.D. Power, stated, “Because of the disruption to dealer software systems, June sales will not be reflective of actual consumer demand for new vehicles. Instead, a significant number of sales that would have occurred in June are now likely to occur in July.”
In addition to operational disruptions, a Bloomberg report suggested that CDK is considering paying a ransom to the hacking group, believed to be called BlackSuit, to end the outage. However, CDK has not confirmed whether any payment has been made.
As CDK Global continues to work on restoring its systems, the affected dealerships and the broader market are anxiously awaiting a return to normalcy. The incident underscores the vulnerabilities in the digital infrastructure of critical business sectors and the far-reaching impacts of cyberattacks.
