CDK cyberattack outage could lead to 100,000 fewer cars sold in June, experts say

The CDK Global cyberattack is expected to cut auto dealerships’ vehicle sales in June down by about 100,000, or more than 7%, compared with the same period in 2023. 

The projected decrease is not reflective of weak demand, but rather the anticipated consequence of some dealerships’ reliance on CDK sales software for transactions. Many dealers have been without full access to their systems for more than a week, with no promise from CDK that they’ll be back up and running by the end of the month

“An auto dealership is basically run by its dealer management system, or DMS — it’s the financial backbone of these dealerships,” Tyson Jominy, vice president of data & analytics at J.D. Power, told CBS MoneyWatch. “It connects all the pieces of a dealership together, including new and used vehicle sales and the financing. It’s a very important operations system.” 

The outage, which CDK has said was caused by a “ransom event,” came at an inopportune time for car buyers and sellers. 

“June is one of the most important selling months for the auto industry, and we were expecting sales to be fairly strong,” Jominy said. “It’s part of the summer selling season, when families get out of school and want a new car to take a road trip.”

Fewer cars to be sold in June

J.D. Power estimates that total new vehicle sales for June will reach 1,273,600 on the low end, reflecting a 7.2% decrease from June 2023. That includes car sales to regular consumers, as well as fleet sales to businesses or rental car companies. 

On an annualized basis, that would reflect a selling rate of about 15 million units for the full year, when the industry should be at 16 million, according to Jominy. 

The average transaction price for new vehicles is $45,000, meaning the hit to dealerships could be substantial in dollar terms. Some car sales lost in June could occur in July, if CDK systems are restored by then

“Because of the disruption to dealer software systems, June sales will not be reflective of actual consumer demand for new vehicles,” Thomas King, president of the data and analytics division at J.D. Power, said in a statement. “Instead, a significant number of sales that would have occurred in June are now likely to occur in July.”

He added that there is still considerable variability to what the official sales tally will be for the month, given the ongoing uncertainty around when CDK systems will be fully restored. 

“Sales will be delayed, but the majority will likely occur in July shortly after the situation is rectified and sales are being made despite system outages,” King added.

Can I even buy a car now?

CDK powers business operations for 15,000, or more than half, of all the auto dealerships across the U.S. Dealerships that don’t rely on CDK’s DMS are able to conduct business as usual, and could even be experiencing an uptick in business, according to Jominy. 

“If you really need car, you could still get one, but you’d need to find a dealer that uses one of CDK’s competitors’ products,” Jominy said. 

Those dealers that are CDK customers have had to find workarounds to transact with customers, including recording sales manually with pen and paper. 

“If you’re a consumer and you go to a dealership, the cars are still there and you could potentially maybe take one home, but dealerships are precluded from in some cases getting consumers approved for a loan, or being able to finalize transaction,” Jominy said. “A dealership without DMS system is a bit like playing hockey without skates. You can still play, but it’s going to be a lot slower and harder to do.”

This post was originally published on CBS News

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