News
CDK Global cyber attack leaves thousands of car dealers spinning
Bel Air dealership among companies across the country affected by cyber attack
US car dealerships are struggling after cyber attacks this week on CDK Globalsoftware maker used to operate its business, has made it virtually impossible to sell vehicles.
Tom Maioli, owner of Celebrity Motor Car Company, which operates five luxury car dealerships in New York and New Jersey, said CBS MoneyWatch his business is “completely closed.”
“We can’t process the paperwork. Everything is frozen, everything is tied up – we can’t move money back and forth to pay for cars, to finance our customers’ transactions,” he said.
Click here to view related media.
Click to expand
Such disruptions are particularly damaging to sales-oriented businesses such as car dealerships, where car buyers who are prepared to spend their money on a vehicle may walk away when faced with frustrating delays. Maioli said that while he tries to keep customers engaged, he has no idea when his sales systems will be fully functional again, leaving the business in limbo.
The company’s dealership management system, used by about 15,000 dealers, remained unavailable on Thursday and Friday, causing headaches for dealerships and potential car buyers.
For one family in New Jersey, the outage meant they couldn’t drive their new Audi Q5. Daniel Lanni said Bloomberg His family had expected the vehicle to be delivered on June 19, but it is now unclear when they will take possession.
“The kids were really excited,” Lanni, a 41-year-old commercial real estate broker, told Bloomberg. “They are upset and now regularly ask about it.”
On Wednesday, CDK Global terminated its services as a precaution, effectively halting sales to its customers. A second cyberattack this week worsened the problem.
CDK has indicated that the outage could last several days and has not publicly announced when it expects its services to be fully restored. The financial repercussions of the technology failure are expected to be substantial, as CDK drives sales for about half of U.S. auto dealerships.
“Real pain in the rear”
Geoff Pohanka, president of Pohanka Automotive Group, told CBS MoneyWatch that 20 of the company’s dealerships rely on CDK’s dealership management system, or DMS, to operate.
“We are very dependent on DMS and it affects every part of our business,” he said. “It generates all our forms. If you come in, we enter you into the system, it creates a file of paperwork and finances, and at the moment none of that is working.”
Pohanka, who said the dealership still has phone and internet service, said the company is doing what it can to keep sales going. “We may not be able to sign all the documents and we will need to bring the client back to complete them, but we can still function,” he said, while admitting that “everything takes longer [and] It’s more complicated.”
The DMS outage also affects the company’s service and parts department. Typically, the dealership uses CDK software to generate electronic contracts and print work orders. Now they are operating manually, which is slower.
“We will certainly lose business because it takes longer to complete transactions and some things will not be noticed. There will be losses,” Pohanka said. “It’s debilitating, and the longer it goes on, the harder it will be for dealers. I know we’re going to lose revenue. It’s really a real headache.”
Sport Honda, a Honda dealership and CDK customer in Silver Spring, Maryland, is also striving to continue serving customers.
“It’s a difficult task, but there was paper before there were computers, so we have to do it this way,” a dealership manager told CBS MoneyWatch. “You can navigate your computer software and go back and do things like you used to.”
Employees at other dealerships adopted social media forums to say they were tracking orders on “sticky notes” or using Excel spreadsheets to record transactions.
For CDK, the consequences may not just be technological. Maioli, owner of the car dealership, said he has hired a lawyer and is considering a class action lawsuit against the company.
More