When the software went down at car dealerships in North America on June 19, we doubt anyone thought it would be a billion-dollar nightmare. But that’s the reality facing about 15,000 dealers at the start of July. And the problem is still not solved.
Anderson Economic Group estimates that if the outage lasts three weeks, total losses for dealers could reach $940 million. On LinkedIn, founder Patrick Anderson said that figure doesn’t include “many other categories” and assumes new-car buyers frustrated by the cyberattack will ultimately go through with their planned purchases. Automotive News further advises that this estimate does not include legal fees associated with the closing.
The estimate also does not take into account a possible ransom paid by CDK to get its systems working again. Bloomberg confirmed that the cyber attack was launched by an Eastern European group that reportedly demanded $10 million to clear the network. The exact amount is unknown, but apparently something has been done as CDK is slowly restarting its cloud-based systems. The reactivation began on June 27 for a select group of dealers, but only included portions of CDK’s comprehensive dealer management system. It is unclear when the entire system will be 100 percent again for all locations.
Still, it will take dealers even longer to recover. CDK’s software is an all-inclusive package that handles parts and service operations, sales, financing and payroll. Speaking with Engine1a parts and service manager at a Kia dealer said it covers “every aspect” of the business. He turned to manually filling work orders for some repair jobs, but had to turn down many others. As soon as CDK’s software is working again, all those jobs must be entered into the system to process the payments.
“My paperwork is piling up like crazy,” he explained. “It’s going to be hell to generate legitimate paperwork once everything is back in order.”