Dealers Are Set to Lose Nearly $1 Billion Over CDK Cyberattack [UPDATE]

The June 19 outage affected approximately 15,000 dealerships in North America, and the system still isn't fully operational.

By: Christopher Smith

Updated: Jul 1, 2024 at 2:22pm ET

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Update: CDK Global hopes to have all dealer connections live by the morning of July 4. A company representative sent us the following statement:

“We are continuing our phased approach to the restoration process and are rapidly bringing dealers live on the Dealer Management System (DMS). We anticipate all dealers connections will be live by late Wednesday, July 3 or early morning Thursday, July 4. Our Customer Care channels have also been restored and customers can call, chat or submit eCases if they need assistance.

We are also actively working on bringing other applications live, including our Customer Relationship Management (CRM), ONE-EIGHTY and Service solutions.”

When software at automotive dealerships in North America went down on June 19, we doubt anyone thought it would become a billion-dollar nightmare. But that's the reality facing approximately 15,000 dealers as we begin July. And the problem still isn't fixed.

Anderson Economic Group estimates that, if the outage persists for three weeks, total dealership losses could top $940 million. On LinkedIn, company founder Patrick Anderson said this figure doesn't include "many other categories" and assumes that new-car buyers stymied by the cyberattack will ultimately go through with their planned purchase. Automotive News further advises this estimate doesn't include any legal costs related to the shutdown.

The estimate also doesn't account for any potential ransom paid by CDK to get its systems running again. Bloomberg confirmed the cyberattack was launched by an Eastern European group that allegedly demanded $10 million to free up the network. The exact figure is unknown, but apparently something was done, as CDK is slowly bringing its cloud-based systems back up. The reactivation started on June 27 for a select group of dealers, but only included portions of CDK's wide-reaching dealer management system. It's unclear when the entire system will be back to 100 percent for all locations.

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Even so, it'll take dealers even longer to recover. CDK's software is an all-encompassing package that handles parts and service work, sales, financing, and payroll. Speaking with Motor1, a parts and service manager at a Kia dealership said it covers "every aspect" of the business. He resorted to filling out work orders by hand on some repair jobs but had to turn away many others. Once CDK's software is back up, all those jobs will need to be entered into the system in order to process the payments.

"My paperwork is piling up really bad," he explained. "It's going to be hell generating legitimate paperwork once everything is back up."