Product reviews, deals and the latest tech news

CDK Hack Disrupts U.S. Auto Industry

US auto dealers are currently struggling with a cyberattack-induced software outage that has forced many to revert to manual paperwork. CDK Global, a key technology provider for the industry, is working to restore systems used by over 15,000 retail locations. This disruption has impacted CDK’s dealer management system, which is crucial for completing sales, tracking profitability, and monitoring employee compensation. According to JPMorgan analysts, the outage has thrown the auto retail industry into disarray.

Bloomberg News reported that a hacking group called BlackSuit is behind the cyberattack on CDK’s software systems and has demanded millions of dollars in ransom to halt the attack. A threat analyst at security firm Recorded Future confirmed BlackSuit’s involvement. Jim Seavitt, owner of Village Ford in Dearborn, Michigan, expressed hope that CDK would pay the ransom to allow dealers to resume normal business operations.

AutoNation, one of the largest auto retailers in the US, has reported significant disruptions to its business operations. Despite the challenges, AutoNation’s outlets continue to sell, service, and purchase vehicles. Lithia Motors, another major player, has also experienced disruptions in its CDK-hosted system in North America and anticipates ongoing negative impacts until systems are fully restored. Sonic Automotive echoed similar concerns, indicating that the CDK outage is likely to negatively impact its business operations until full system restoration.

Jim Seavitt shared that while sales at his Village Ford dealership have not been directly affected, the process of delivering cars to customers has become much more cumbersome. His dealership sold nearly 100 cars during a recent sale, but the outage has left these vehicles in a state of limbo due to the inability to generate necessary paperwork. Seavitt expects to resolve this issue this week through alternative methods developed by his team. CDK has indicated that services will likely remain down until mid-week.

CDK, which reported the outage last week, has started the restoration process but expects it to take several days to complete. AutoNation and Group 1 Automotive have implemented alternative processes, such as manual paperwork, to continue their operations while taking steps to protect their data. Group 1 Automotive mentioned that the timeline for restoring other impacted CDK applications remains uncertain.

While auto retailers have not yet reported specific sales losses, analysts have flagged potential risks. Citi analysts highlighted possible impacts on late-June US auto sales volume due to the CDK dealer disruptions. Industry consultants JD Power and GlobalData reported that total new vehicle retail sales in the US reached 1.1 million units in June last year.

The ongoing challenges highlight the critical role of technology in the auto industry and the significant disruptions that can result from cyberattacks on key service providers.

Leave a Reply

Your email address will not be published. Required fields are marked *