Car shoppers should expect a mostly normal July 4 weekend. Hackers disabled software that smooths operations at many dealerships in a nationwide cyberattack in mid-June. Reuters reports that the company behind that software “said on Monday it anticipates all dealers to be live on its dealer management system (DMS) by late July 3 or early morning on July 4.”
About the Attack
DMS software streamlines dealerships’ work in the sales and service departments. Dealerships can operate without it, but doing so requires pen-and-paper record-keeping or accessing disparate web systems that don’t work together.
CDK Global is one of the largest DMS providers, claiming 15,000 dealership clients nationwide. On June 18, a cyberattack shut off access to CDK’s systems.
The company hasn’t discussed details — cybersecurity experts often tell companies subject to a hack not to divulge — but widespread security media reports say that an Eastern European hacking group calling itself BlackSuit demanded a ransom payment of tens of millions of dollars to restore access.
Most believe CDK paid the ransom. The company has since been restoring access to its services to a few dealerships at a time. That process could end by the start of the July 4 holiday.
Losses Approaching $1 Billion
Michigan’s Anderson Economic Group describes itself as a “boutique consultancy” and often studies the auto industry. The group estimates that the attack, should it last three weeks, could cost dealerships $944 million.
If CDK manages to restore services by July 4, the duration of the attack will be shorter, and the total figure could fall short of that number. However, CNN reports it could be large enough to impact the economy as a whole.
“A 2.3% decline in retail sales for June would shave nearly a percentage point off the annualized GDP growth rate the second quarter of this year,” temporarily depressing the numbers economists use to understand whether the economy is growing or retreating.
“The good news is what we lose in retail sales in June we should make up in July and third-quarter GDP, assuming all systems are back online,” says Russell Price, appropriately named chief economist at Ameriprise Financial.
Dealerships Won’t Be Normal Right Away
Dealerships may make up the lost sales in July and August. But that process won’t be smooth.
A dealership that finds its CDK access restored can’t immediately return to normal. It needs time to input all the transactions it handled offline over the past two weeks into the system.
It may not fully understand its parts inventory for repairs and new cars for sale until that process is done. It may need time to order replacements.
Recovering from two or more weeks without a DMS would be a lot of work at any time of year. Doing it during the busy July 4 sales weekend seems hopeless.
So, we advise weekend shoppers to prepare as though nothing is normal.
Our recommendations:
- Call Ahead. There is no published list of CDK clients. Without calling ahead, you can’t know if a dealership you plan to visit might be affected. If you’re spreading your shopping across several days, you might benefit from visiting unaffected first and saving test drives at affected dealers until late in your shopping process to give them more time to recover.
- Allow More Time Than Normal. If a dealership you need to visit is impacted, be prepared for any transaction to take longer than usual. Dealers should be able to conduct all types of business this weekend, but their systems may be inundated and slower than normal.
- Consider Shopping on a Weekday Instead. Weekends are the busiest days of the week for car dealers. If you return during the week, you’ll have less competition from other shoppers, and dealers will have more time for you.
Cox Automotive, the parent company of Kelley Blue Book and Autotrader, also owns CDK competitor Dealertrack.
