What to know about the massive car dealership outage | CNN Business (2024)

What to know about the massive car dealership outage | CNN Business (1)

A customer looks at vehicles for sale at an AutoNation Toyota dealership in Hayward, California, US, on Monday, June 24, 2024. The hack that's disrupted business at thousands of car dealerships in North America is now in the process of getting resolved, the targeted software provider CDK Global said.

New York CNN

CDK Global is still down heading into the brisk car-selling Fourth of July holiday next week. Auto dealerships use its software to manage everything from scheduling to records, and the mass outage since last week has paralyzed nearly 15,000 dealerships across North America.

CDK said last Saturday that it has begun restoring its software, but both car buyers and dealers are currently at a standstill. It has suggested several times that a fix is in order, only to say then that its systems would remain out of commission for a while longer.

Here’s what you need to know about the massive software outage.

What does CDK Global do?

CDK Global provides data and technology to different automotive dealerships. Its systems are used by roughly 15,000 car dealerships across the United States and Canada.

CDK operates different software products car dealers use to handle workflow such as keeping records of negotiated deals, to scheduling and communicating about service. Not every dealer uses CDK’s products, and those that do may not use CDK for every dealership task, but the system shutdown has been a problem for many.

To protect customer privacy, customers’ details aren’t written out on a piece of paper that’s just sitting on a desk anymore. Instead, information about deals and customer appointments iskept in a server that’s now impossible for salespeople affected by the outage to access.

Can I still buy a car or get my car repaired?

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.

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.

Can I still register my car?

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.”

Some 30 miles north in Lynn, Massachusetts, 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.

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.

When will CDK be back online?

CDK Global doesn’t believe its systems will return online before June 30.

In an automated voice message to clients, CDK said it is making “significant progress” in restoring its core application.

“We do feel it’s important to share that we do not believe that we will be able to get all dealers live prior to June 30,” the message said.

The company also urged dealerships to make alternate plans for their month-end financial reports.

However, CDK gave dealerships encouraging news on Wednesday. It said it was able to bring a “small initial test group” of car dealerships back online. The company also said it’s also working to bring additional applications back online, such as its customer relationship management and service solutions, as well as its customer care channels.

Problems began last Wednesday when CDK spokesperson Lisa Finney told CNN that the company wasinvestigating a cyber incident.

“Out of an abundance of caution and concern for our customers, we have shut down most of our systems and are working diligently to get everything up and running as quickly as possible,” Finney said in the statement.

Later that day, the company said most of its critical computer systems were back online. But the next morning, the company told dealerships another incident had happened.

Why did systems go down?

CDK has said it is working to investigate the shutdown after two cyber incidents brought its systems to a standstill. The company has not confirmed who was behind the incidents.

Bloombergpreviously reportedthe company was negotiating with an Eastern Europe-based hacker group demanding tens of millions of dollars in ransom to end the outage.

CDK has not responded to CNN’s request for comment about the reported ransom.

Why is this hack so impactful?

While companies used fewer interconnected workflow systems in the past, the move to cloud computing and reliance on third-party software systems — despite helping daily business operations — creates complex systems that are more susceptible to widespread hacks.

If the main part of the centralized system goes down, it means that everything goes down. Rather than having to hack each dealership individually, all hackers have to do is hack where all the data is stored for all of them.

“It also creates kind of a bullseye and it helps attackers focus their efforts on specific types of infrastructure or specific cloud platforms,” Eric Noonan, CEO of cybersecurity provider CyberSheath, said.

And hackers are targeting organizations that serve in the supply chain of industries. By attacking CDK’s software, for instance, hackers were able to bring the vehicle dealership industry to a standstill. That gives hackers leverage to ask for larger and larger sums of money, said John Dwyer, director of security research at Binary Defense, a cybersecurity solutions firm.

Though hackers have more leverage, the success of paying a ransom and a speedy recovery is elusive, experts said.

“There’s never been a story written on a company that successfully paid a ransom, and then quickly recovered their systems,” Noonan said.

What is the financial impact on dealerships?

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.

Tom McParland, the owner of Automatch Consulting, a national car buying service, said the outage was impacting customers because they now 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.

What to know about the massive car dealership outage | CNN Business (2024)


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 dealer lots empty? ›

A car inventory shortage refers to a situation in which a car dealership or manufacturer does not have enough vehicles in stock to meet demand. Supply chain disruptions, changes in consumer demand, quality control issues, and production delays can cause car inventory shortages.

How many dealerships use CDK? ›

CDK Global, a software provider to some 15,000 car dealers, was waylaid by debilitating cyberattacks this week that have had a crippling effect on the auto sales industry.

Who hacked CDK? ›

Multiple outlets later reported that the group behind the attack was identified as BlackSuit, a cybercriminal team that spun off of an older, Russian-linked hacking group called RoyalLocker, according to Reuters.

Who bought out CDK? ›

On April 7, 2022, CDK Global agreed to be acquired by Brookfield Business Partners and institutional partners for a total enterprise value of $8.3 billion. The deal offered CDK investors $54.87 for each share held, representing a 30% premium. Brookfield completed the deal on July 6, 2022.

How many dealers does CDK have? ›

Trusted by nearly 15,000 dealer locations, CDK Global connects you to world-class dealership software solutions that work together to help you reach your potential.

What not to say to a dealer? ›

Eliminating the following statements when you buy a car can help you negotiate a better deal.
  • 'I love this car! ' ...
  • 'I've got to have a monthly payment of $350. ' ...
  • 'My lease is up next week. ' ...
  • 'I want $10,000 for my trade-in, and I won't take a penny less. ' ...
  • 'I've been looking all over for this color. '
Feb 14, 2021

Why are auto sales declining? ›

Vehicle inventory levels are growing, incentives are increasing and there's growing uncertainty surrounding the economy, interest rates and U.S. presidential election, according to Cox Automotive.

Is there still a car shortage in 2024? ›

The automotive supply chain will likely never look like it did pre-pandemic, but inventory levels generally recovered in 2023 and are expected to continue doing so in 2024 and 2025. Car prices remain elevated in 2024 due to inflation but are showing initial signs of decreasing as inventory stabilizes.

Who is the largest auto distributor? ›

Bosch continues to be the world's largest automotive supplier, and Denso remains the world's second largest. Next in line are ZF, Hyundai Mobis, and Magna. On the other hand, CATL moved up to sixth place in FY2022 due to increased battery demand.

Who is the largest auto dealer? ›

Top 10 US Car Dealership Groups by NEW Units Sold – 2021 vs. 2022
Dealership GroupRank 2022Total Units sold in 2022
Lithia Motors Inc1679,518
AutoNation Inc.2597,256
Penske Automotive Group Inc3539,717
Group 1 Automotive Inc.4376,486
6 more rows
Aug 9, 2023

Who is the largest auto dealer group in the US? ›

In comparison, Lithia Motors has continuously expanded its dealership network without falter since 2014, acquiring 32 locations in 2022 alone. With over 290 storefronts, it now claims to have surpassed AutoNation in size, making it the biggest dealer group in the U.S.

What's going on with CDK? ›

Fallout from the ransomware attack has dragged into a third week for the 15,000 car dealerships that rely on CDK's sales, inventory management and customer relations systems to run their businesses. CDK on Saturday said the company was making progress in restoring its systems for all of its clients.

What does CDK stand for? ›

Cyclin-dependent kinase, a major class of enzymes involved in the regulation of the cell cycle.

Does GM use CDK? ›

CDK Global serves almost 15,000 car dealers across the U.S., including GM brands.

Do you pay the ransom for ransomware? ›

The FBI does not support paying a ransom in response to a ransomware attack. Paying a ransom doesn't guarantee you or your organization will get any data back. It also encourages perpetrators to target more victims and offers an incentive for others to get involved in this type of illegal activity.

Do they decrypt the data after the ransom is paid? ›

Paying the ransom does not guarantee the encrypted files will be released; it only guarantees that the malicious actors receive the victim's money, and in some cases, their banking information. In addition, decrypting files does not mean the malware infection itself has been removed.

How much was CDK Global Acquisition? ›

Paul, Weiss advised CDK Global, Inc., a leading automotive retail technology company, in its $8.3 billion all-cash acquisition by Brookfield Business Partners, Brookfield Asset Management's flagship private equity vehicle.

Was CDK Global a spinoff? ›

(ADP) completed the distribution to its stockholders of all of the issued and outstanding common stock of CDK Global, Inc. in a tax-free spin-off. The distribution completes the spin-off by ADP of its automotive dealer services business.


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