Cyberattack Makes US Car Dealer Return To Manual System

JAKARTA – Car dealers in the United States are facing software outages caused by cyberattacks. This forced some of them to return to manual paper use when auto industry technology provider CDK is trying to restore the system used by more than 15,000 retail locations.

The outage affecting the CDK dealer management system, which is used to complete transactions, track store profitability, and monitor employee compensation, has “rejected the automotive retail industry,” JPMorgan analyst said last week.

AutoNation, one of the leading US auto retailers, said the outage disrupted and had a negative impact on its business, although its outlets remained open, continued to sell, serve, and buy vehicles. Lithia Motors also reported disruption to the system hosted by the CDK in North America, and this incident is expected to have a negative impact on their business operations until the system fully recovered.

Jim Seavitt, owner of a Ford Village dealer in Dearborn, Michigan, said outages have so far not reduced sales, but have made the process of delivering cars to customers more complicated. The dealers sold nearly 100 cars during last week’s major sales, but as CDK produced the documents needed to officially hand over the cars to customers, the vehicles are still in process.

Seavitt expects the vehicle to be transferred this week after his team developed another way to complete the required documents. CDK has told him that the service is likely to drop until the middle of the week. “We don’t want to see this drag on,” Seavitt said.

The CDK, which reported outages last week, said Monday it had started a recovery process. The CDK also confirmed that this process would take several days to complete.

AutoNation and Group 1 Automotive use alternative processes such as manual documents to run their business. Both said they had taken precautions to protect their data. “The recovery time of other affected CDK applications is still unclear at this time,” Group 1 said in a statement.

Bloomberg News reported on Friday, June 21 that a hacker group claiming responsibility for attacks on the CDK software system had demanded millions of dollars in ransom to end the hack. A hacker group named Black Suit was behind this cyberattack, according to a Bloomberg News report on Monday, June 24, citing a threat analyst at security firm Recorded Future.

Seavitt said he hoped CDK would pay the ransom so that dealers could return to running their business as usual.

Although car retailers have not detailed the impact on sales, analysts have identified possible impacts. “We recorded several potential risks to the late June US car sales volume of the reported CDK dealer disruption,” analyst Citi said in a note last week. The total retail sales of new vehicles in the US reached 1.1 million units in June last year, according to data from industry consultants JD Power and GlobalData.

Retailer Sonic Automotive’s car last week said the CDK outages would likely have a negative impact on their business operations until the system fully recovered.

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