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Ever thought about how dependent we’ve become on technology? Well, the recent cyberattack on CDK Global, a major software provider for car dealerships, gave us a harsh reminder.
This attack stopped operations at 15,000 dealerships— there's about 70,000 of those in the US.
What Happened? The cyberattack struck CDK Global early morning on June 19, right on Juneteenth, a busy holiday for car dealers. Initially, CDK managed to restore some services by midday, but a second attack forced another shutdown.
What is CDK's Role in the Automotive Industry? CDK’s dealer management system (DMS) is pretty much the backbone of car dealership operations. It handles everything from sales leads and trade-ins to auto loans and vehicle registration.
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Over 2.6% of the US GDP flows through CDK’s systems.
With CDK down, dealerships had to revert to pen and paper. Brookfield Business Partners, which acquired CDK for $8.7 billion last year, saw its stock take a nosedive 👇
Despite the cyberattack, the sales growth numbers of many major car companies were mixed:
In Q1 2023-2024, General Motors saw a modest sales growth of 7.6%, slightly down from 11% the previous year. Toyota's sales growth jumped a lot to 20% from 5.8% in Q1 2022-2023. Honda had a slow, but modest increase in sale, reporting 8% in Q1 2023-2024 compared to 0% previously. Tesla faced the steepest decline, with sales plummeting by -8.7% after a strong 24.4% growth in the previous year.
Since the automotive industry is already grappling with high vehicle prices and rising interest rates, a cyberattack is the last thing a dealership wants.
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The average new car sticker price hit $48,759 in December, nearly 30% higher than in January 2019. The monthly payments have almost doubled to around $788.
Where do you see the automotive industry headed? What do you think poses the biggest risk to car dealerships other than cyberattacks?