‘Months to correct, if not years’: Car dealerships and customers feel the impact as CDK outage drags on | CNN Business (2024)

‘Months to correct, if not years’: Car dealerships and customers feel the impact as CDK outage drags on | CNN Business (1)

Cars sit on a Chevrolet dealership's lot on June 20, 2024 in Chicago, Illinois. A cyber attack on CDK Global, a software provider that helps dealerships manage sales and service, has crippled the workflow at approximately 15,000 dealerships across the United States and Canada.

New York CNN

A CDK Global system outage has affected nearly every aspect of the Mazda dealership in Seekonk, Massachusetts, where Ryan Callahan is general sales manager. He says it won’t be a simple fix.

“The financial impact it will directly have on us will take months to correct, if not years,” Callahan said.

Car buyers and dealers are grappling with the shutdown of the retail software provider, which has left nearly 15,000 car dealerships across North America struggling to provide services to customers and scrambling to find temporary analog solutions to operate.

CDK says it’s working on restoring its systems and expects them to be back online in several days, but in the interim, customers and dealership employees remain beset by long wait times, delays – and missed chances to make or save money.

Tom McParland, the owner of AutoMatch Consulting, a national car buying service, said the outage was impacting customers because they have fewer dealers to choose from.

“It reduces their ability to get a deal,” he said. “It limits the customer’s leverage.”

Some dealers also can’t apply factory rebates without CDK’s software, so customers may miss out on money-saving deals. For customers looking to buy a car, McParland suggested casting a wide net and shopping outside their local market to find the best price.

‘They aren’t really able to drive their cars’

Midway Automotive uses a CDK product to register cars with the Massachusetts Registry of Motor Vehicles.

Owner Michael Deveney says that after the shutdown on Wednesday, the dealership started sending customers to their local RMV office in order to register their cars in person after purchase.

“That was up until Thursday. Then customers started being told that (the RMV) wasn’t taking any walk-ins,” he said. “They were probably getting flooded with customers and started turning people away.”

Deveney said one customer got increasingly agitated because he couldn’t register his car. “Getting an appointment might take three or four days, and in that time they aren’t really able to drive their cars,” he added.

Some 30 miles north in Lynn, Katelyn Salvato says she hasn’t been able to register a vehicle since last Tuesday. Salvato works as a title clerk for Pride Motor Group, registering cars for three dealerships.

“Today… I sent 21 registrations to be done manually at the Massachusetts RMV,” she said, adding that the RMV won’t accept transactions from dealership employees. “The transactions must be dropped off within the designated hours (of 10 am to 3 pm), and the runner can’t wait for them.”

Callahan echoed those concerns. Under normal circ*mstances, the CDK software allows the dealership to register a vehicle almost instantaneously, but now the process faces heavy delays.

“Our remote registration system is rendered useless without CDK to talk to it. We’ve had to send a runner with the registrations to the DMV to be competed in packs, costing several days where prior it took hours,” Callahan said in an interview with CNN.

If a vehicle isn’t registered within seven days of purchase, the state penalizes both the dealership and customers.

The Massachusetts Department of Transportation, which oversees the state’s RMV, has not responded to CNN’s request for comment.

Service and sales go analog

Salespeople and service employees who spoke with CNN say they’ve resorted to using pen and paper to process purchases, which has drawn out the amount of time it takes to buy a car, according to Scott Campbell, a salesman at Capital City Buick GMC in Berlin, Vermont. He estimates wait times have doubled or tripled.

Nicolas, who declined to provide his full name because he was unsure about his employer’s stance on speaking to the media, is a clerk in the parts department of a Porsche dealership in Los Angeles. He said he has been using “a mix of pen and paper, Excel sheets, and extra care for each invoice” since the shutdown.

Since many dealerships use CDK products to manage inventory, Nicolas said his department is now forced to manually record inventory parts, which slows their work down significantly. “We don’t have clear view of stock and have to do regular inventory on our most used parts,” he added.

But sometimes the analog workarounds are not enough.

Delays at dealerships

Several buyers and repair customers tell CNN they’ve experienced long delays.

Don Ayco*ck told CNN he drove 90 miles round-trip from his home to a car dealership in Clay County, Florida, to buy a new Buick on Thursday, a day after the CDK shutdown. He told CNN he was able to buy the car but was unable to sign the title.

“We got a call from them today that we can come next Thursday to sign the paperwork for the title and get a permanent license plate,” he said, noting that it will be another lengthy round-trip drive.

In San Diego — where temperatures in recent days have been pushing 90 degrees — Robbie Jacob and his wife tried to make an appointment at a Kia service center to fix their car’s broken air conditioning unit. Jacob said the center told them it was unable to service the car, citing the CDK cyber incident, as there were no appointments available and all walk-ins were suspended until next week.

Other software providers take note

CDK Global isn’t the only management system used by dealerships, and the back-to-back cyber incidents affecting the company have put their competitors on high alert, as well.

Cox Automotive, which operates the Dealertrack and VinSolutions software systems to manage documents and customer service, told CNN that it temporarily stopped integrating its systems with CDK after the outage “as a precautionary measure to prioritize safety and security for our clients.”

“While actively supporting our customers to continue to run their business, we established a secure microsite that our customers are actively using now to access support and guidance, work-arounds and actions they can take while CDK systems are not available,” the company said.

Tekion, another software company used by dealerships, said it has “seen an increase in inquiries from dealers in light of the recent CDK incident.”

And other industry experts told CNN that switching from one system to another is not an action that dealerships can just take on a whim. Businesses are often locked into a multi-year contract with a software provider. Switching software also means training employees, making it a lengthy process.

Meanwhile, Asbury Automotive Group, one of America’s largest care retailers and service providers, warned investors Monday that the CDK outage has hurt its business, and it’s unclear when it will end. Rival Group1 Automotive said CDK believed the outage would be resolved in days, not weeks, but it was unclear how much financial damage the company faced as a result.

A previous version of this article incorrectly stated the name of AutoMatch Consulting, a national car buying service.

CNN’s Nathaniel Meyersohn contributed to this reporting.

‘Months to correct, if not years’: Car dealerships and customers feel the impact as CDK outage drags on | CNN Business (2024)

FAQs

‘Months to correct, if not years’: Car dealerships and customers feel the impact as CDK outage drags on | CNN Business? ›

At a Mazda dealership in Seekonk, Massachusetts, general sales manager Ryan Callahan said the outage has affected nearly every aspect of its business. “The financial impact it will directly have on us will take months to correct, if not years,” Callahan said.

What dealerships use CDK? ›

Five of the six — Asbury Automotive Group, AutoNation, Group 1 Automotive, Lithia Motors and Sonic Automotive — use CDK as their primary DMS provider. Penske Automotive Group said it does not use CDK's DMS at franchised dealerships in the U.S. or the U.K. but does for its Premier Truck Group.

What's going on with CDK? ›

CDK Global was hit with a ransomware attack affecting thousands of U.S. auto dealerships. Keep reading to learn more about this attack and how it affected the industry. Ransomware attacks are not a new phenomenon and are continuing to have a widespread impact across multiple industry sectors.

Will car salesman be obsolete? ›

Gasoline-powered cars could soon start to disappear, but car dealers aren't going anywhere, in part because they're protected by strong franchise laws. Their business is changing fast, however, as car sales move online and electric vehicles get more popular.

Why do customers continue using car dealerships instead of purchasing the car directly from the manufacturer at its factory? ›

Car dealerships reduce the transaction costs of buying a car. If a customer wanted to buy direct from the factory, there would be significant transaction costs in making the trade, like having to travel to the factory and getting the car back home.

Who bought out CDK? ›

Last April it was announced that CDK Global, Inc., was being acquired by Brookfield Business Partners for $8.3 billion. Under merger agreement terms, CDK shareholders were said to receive $54.87 per share in cash upon completion of the transaction.

How many dealers does CDK have? ›

Indeed, that hack has taken a toll on all of the roughly 15,000 auto dealers that rely on CDK Global software to run their service departments, process financing for car purchases, generate sales leads and manage customer relationships.

What does CDK do for car dealerships? ›

CDK offers cloud-based software to more than 15,000 auto dealerships across North America that manages vehicle acquisitions, sales, financing, insuring, repairs and maintenance.

What company spun off CDK Global? ›

On October 1, 2014, ADP Dealer Services division was spun-off to form the independent company CDK Global.

Did CDK pay ransom? ›

It is unclear whether CDK chose to pay the ransom, although one news outlet reported that they did. The software company managed to restore services to a small test group of dealers a week after the attack and has since been bringing more dealerships online.

Why are auto sales declining? ›

Vehicle inventory levels are growing, incentives are increasing and there's growing uncertainty during surrounding the economy, interest rates and U.S. presidential election. That's largely good for consumers, some of whom have been waiting years to purchase a new vehicle, but a headwind for automakers.

How much profit do dealers make on new cars? ›

Based on data from the National Automobile Dealers Association (NADA), the average gross profit margin on a new car sale for a dealership is around 3.9%. This means that for a $30,000 car, the dealership's gross profit would be approximately $1,170. However, it's important to note that this is just the gross profit.

Do car salesmen still negotiate? ›

In most cases, you'll still need to negotiate the value of your trade, the cost of financing and the price of any add-ons. If a car is in high demand, a dealership can charge far more than the sticker price. When demand is lower, you can expect to pay less than the sticker price.

Will car manufacturers sell directly to consumers? ›

The newer companies typically don't have traditional dealerships. Instead, they call their stores “spaces” or “galleries.” There's a reason these companies don't use the term “dealership.” Most states have franchise laws that prohibit auto manufacturers from making sales directly to consumers.

Why do car dealers even exist? ›

In order to get more cars to market more rapdily, automakers entered into partnerships with local dealers who made significant investments in real estate, inventory, marketing and the assorted people needed to sell and maintain cars.

Why do car manufacturers have to use dealers? ›

State franchise laws prohibit auto manufacturers from making sales directly to consumers. This paper advocates eliminating state bans on direct manufacturer sales in order to provide automakers with an opportunity to reduce inventories and distribution costs by better matching production with consumer preferences.

What credit bureau do most dealerships use? ›

What credit score do auto lenders look at? The three major credit bureaus are Experian, TransUnion and Equifax. The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage.

Who competes with CDK? ›

CDK Global's Top competitors in the automobile-dealership-management category are FlickFusion, Dealertrack, Reynolds and Reynolds.

What does CDK stand for in automotive? ›

Complete knock-down, a production technique, often used in automotive industry.

What is CDK used for? ›

The AWS Cloud Development Kit (AWS CDK) is an open source software development framework to model and provision your cloud application resources using familiar programming languages. AWS CDK enables you to model application infrastructure using TypeScript, Python, Java, and . NET.

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