Car Dealerships Face Hidden Costs and Long-Term Struggles After CDK Cyberattack

A few weeks after a cyberattack rendered a major automotive software supplier completely inoperable, tiny car shops throughout the country are still dealing with the devastating aftermath. The software used by dealerships to handle sales, inventory, and customer care was the focus of the June attack on CDK Global. Small dealerships are facing several difficulties as a result, which is straining their cash flow and day-to-day operations.

The intrusion, which is thought to have been caused by ransomware, prevented dealerships from accessing vital software. This resulted in challenges maintaining client interactions, processing finance applications, and concluding auto transactions. Dealerships experienced delays in closing transactions as a result of these fundamental operations being hindered, which might have resulted in lost business. Dealerships were occasionally obliged to use manual workarounds, which greatly increased the time and effort needed to finish transactions.

Tom Maoli, the owner of a Lexus dealership in New Jersey, provides an example of how small businesses are affected financially. Maoli highlighted the major disruption caused by the software failure by reporting a startling 50% reduction in new car sales for the month after the assault.

The effect is not limited to the showroom floor. Additionally, service departments use CDK's software extensively for appointment scheduling, warranty claims processing, and inventory management of components. Customers requesting basic maintenance or warranty services, including oil changes, have had to wait longer due to delays in getting this information.

A Huge Impact

Experts in the field stress how important CDK software is to dealership operations. J.D. Power, a consumer data and analytics company, referred to the targeted systems as the "backbone of an automotive dealership," linking several divisions such as financing, servicing, and sales of both new and used cars. The interruption caused by the assault has impacted every aspect of dealership operations.

While CDK Global anticipates full system restoration by July 4th, the road to recovery for small dealerships will likely be long. The attack has exposed vulnerabilities in their reliance on a single software provider and may prompt them to invest in additional cybersecurity measures. Additionally, dealerships face the challenge of regaining lost business and customer trust, particularly if data breaches were involved.

The cyberattack serves as a stark reminder of the growing importance of cybersecurity in today's digital age. Small businesses, often with limited resources, are especially vulnerable to these attacks. As dealerships explore alternative software providers and invest in better security protocols, both car buyers and sellers are advised to be patient during this recovery period. With disrupted workflows and potential data breaches to address, small car dealerships have a significant uphill battle to overcome the lingering effects of the CDK cyberattack.

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