Anderson Economic Group

CDK Cyberattack Dealer Losses Estimated At $1B 
 
 
 
 
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 5 
 A recent series of cyberattacks on CDK Global, which provides dealer management system (DMS) services to auto dealerships across the U.S., has led to nearly $1 billion in losses to those vehicle dealers, according to the latest estimates by data analysis and consultancy firm Anderson Economic Group LLC.

 Anderson reports that the cyberattacks, which consist of ransomware attacks against car dealerships using CDK software, caused direct losses of $944 million to the affected dealers during the initial three weeks.

 

 Automotive sales at the roughly 15,000 dealerships targeted by the attacks against CDK fell by 5 percent in June as a result of the incident. Losses during the week ending on June 22nd, 2024 amounted to approximately $284 million, increasing to $321 million during the week ending June 29th and then $339 million for the week of July 6th.

 The losses include lost sales and service income as customers took their business elsewhere when attempted purchases or repair orders were delayed by software problems. They also include other expenses related to the cyberattacks, such as paying ransoms to the hackers, hiring software professionals to try to bypass the cyberattacks and get systems back online, and interest paid on inventory.

 

 The attacks began early in the morning on June 19 th , 2024, with CDK Global responding by shutting down its dealer management systems to protect its dealer customers from direct effects by the ransomware. DRIVE, Fortellis, and Modern Retail CRM were major components of the CDK suite affected by the attack and subsequent precautionary shutdown.

 The hackers, probably located somewhere in Eastern Europe, demanded a ransom of tens of millions of dollars from CDK in exchange for ceasing the attacks. The also launched a second cyberattack five days after the first, prolonging the system shutdown. Many dealerships started using the much less efficient method of writing pen-and-paper vehicle orders. Finally, the software provider restored service ahead of schedule.

 

 Combined with high vehicle prices, soaring interest rates, and economic uncertainty, June new-vehicle sales might fall as much as 7.2 percent year-over-year, while overall first-half 2024 sales growth might be limited to slightly over 1 percent, according to some sources.

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