Dealership Outage: Causes and Solutions Explained

CDK Global, a top dealer management software provider, faced a cyberattack. This led to shutting down its IT systems and affecting over 15,000 car dealerships in North America¹². The issue lasted for several days, causing big problems for dealerships in tracking parts, making new sales, and offering financing¹². This dealership outage has caused chaos!

Big car companies like Stellantis, Ford, and BMW said their dealers were hit by the CDK outage. Many dealers had to use old-school methods, like writing orders by hand, to help customers¹. This has made dealers worry about their system safety and the risk of hackers getting into their networks².

Some think CDK Global might have faced a ransomware attack. This could mean they lost backups and the fix could take longer². If true, this could lead to encrypted devices, stolen data, and ransom demands, making things worse². To stay safe, CDK told dealers to turn off their always-on VPNs².

This outage shows how important strong security is and how businesses must meet new customer needs in a digital world. With supply chain issues, inventory problems, and higher costs, dealers need to find new ways to stay profitable. Using remote video monitoring and improving customer service are key to overcoming these hurdles.

Key Takeaways:

• CDK Global’s software shutdown due to cyberattacks affected over 15,000 dealerships across North America
• Dealerships faced disruptions in sales, financing, and parts ordering, forcing many to resort to manual processes
• Concerns arise over the vulnerability of dealerships’ systems and potential exploitation by threat actors
• Rumors suggest a possible ransomware attack on CDK Global, which could prolong the outage duration
• Dealerships must adapt to changing customer expectations and implement multi-layered security strategies to navigate challenges

The Impact of CDK Global Cyberattacks on Dealerships

CDK Global, a top provider of Dealer Management System (DMS) software, faced cyberattacks recently. This led to a software shutdown, affecting about 15,000 auto dealers³. The impact was huge, hitting service departments, financing, sales, and customer relations hard³.

Dealerships lost a lot of money, with losses estimated at $944 million⁴. The attack slowed down car sales and made credit checks and loan processes slower⁴. One dealer saw new car sales drop by 50% in one month³.

15,000 Dealerships Affected by Software Shutdown

There are about 70,000 new vehicle dealers in the U.S. today⁴. The CDK Global cyberattack hit a big part of the industry, affecting 15,000 dealers⁴. This shutdown caused big financial losses and put customer info at risk of theft⁴.

Car sales fell by over 5% in June because of the attack³. Transactions took much longer because of system failures, making things harder for dealers and customers³.

Dealerships Resort to Pen and Paper Operations

Dealerships had to use pen and paper to keep going after the shutdown⁴. This caused big delays and problems for dealers and customers. Owners had trouble with scheduling and tracking parts⁴.

Customers waited longer for services like oil changes and warranty work³. Using paper instead of software made things slower and more prone to mistakes.

CDK Global is working hard to fix their systems. They wanted to get all dealers back online by July 4³. But, getting over this cyberattack will take a lot of time and effort. Dealerships must rebuild trust and improve their processes.

BlackSuit Ransomware Group Behind the Attacks

The BlackSuit ransomware group is behind the recent attacks on CDK Global, a big name in dealership management systems. They are known for their advanced hacking skills and targeting big names. They made CDK shut down its IT systems and data centers, causing big problems for car dealerships in North America⁵.

Reports say the BlackSuit ransomware group is talking with CDK Global. They want a decryptor and promise not to leak stolen data⁵. They’re asking for tens of millions of dollars, showing how serious the attack is and the big hit it could be for CDK⁶.

Many car dealerships like Penske Automotive Group and Sonic Automotive have been hit hard by the CDK Global outage⁵. Sonic Automotive saw big problems with sales, managing inventory, accounting, and dealing with customers⁵.

“The BlackSuit ransomware attack on CDK Global has had far-reaching consequences for the automotive industry, exposing vulnerabilities in dealership management systems and emphasizing the need for robust cybersecurity measures.”

BlackSuit’s malware is linked to Royal Ransomware, with whom they often work together⁶. The U.S. Cybersecurity and Infrastructure Security Agency says BlackSuit’s malware is similar to Royal Ransomware’s tools⁶. These groups have hit over 350 organizations worldwide since September 2022, asking for over $275 million in ransom⁵⁶.

BlackSuit is an expert in hacking both Linux and Windows systems. They’ve claimed attacks on places like a Georgia school system and Indiana University, stealing over 200 gigabytes of data⁶. In April, they made nearly 200 plasma donation centers shut down worldwide⁶.

After the attacks, threat actors are pretending to be CDK agents or affiliates to get into dealership systems without permission, adding more security risks⁵. The BlackSuit ransomware attack on CDK Global shows how big the cybercrime threat is. It highlights the need for strong security to protect data and keep businesses running smoothly.

Restoration Process and Timeline

After the dealership outage cyberattacks hit dealerships across the U.S., CDK Global worked hard to fix its systems. More than 50% of dealers used CDK’s software before the attack⁷. Fixing the systems was a top priority for CDK.

CDK Global took a step-by-step plan to get dealers back online. This plan helps the company check the system’s stability and adjust as dealers get back to work.

Phased Approach to Bringing Dealers Back Online

CDK started fixing its systems on June 26, first for a few dealers⁷. This was the start of a careful process to avoid more problems and make sure dealerships could work smoothly.

CDK focused on fixing systems for certain dealers first. This way, the company could watch how the systems worked and make changes before opening access to all dealers.

Anticipated Full Restoration by July 4th

CDK aims to fully fix its systems by July 4th. They plan to have all dealers connected by late July 3 or early July 4. This shows CDK’s effort to lessen the cyberattack’s effect on its clients and their customers.

CDK also brought back its Customer Care channels during the fix. Now, customers can call, chat, or send eCases for help. This ensures they get the support they need during this tough time.

The restoration process is moving forward. Dealerships and their customers will see things get back to normal slowly. With the step-by-step plan and the goal of full restoration by July 4th, CDK Global is working hard. They aim to help the automotive industry get past this tough time and come out stronger.

Challenges Faced during the Dealership Outage

A recent cyberattack on CDK Global’s dealer management system has hit over 15,000 retail locations hard⁸. Dealerships are now facing big problems, struggling to keep things running smoothly and give customers a good experience.

Delays in Vehicle Sales and Maintenance Scheduling

Dealerships are seeing big delays in selling cars because of the outage. Salespeople can’t access deals in the system, which could mean losing sales⁹. For instance, Village Ford in Dearborn, Michigan, sold almost 100 cars but hit a snag in delivering them due to CDK’s issues⁸.

Also, maintenance scheduling is getting hit hard. Dealerships use the same software for parts and service⁹. This means delays in fixing cars and unhappy customers.

Customer Privacy Concerns

There’s a big worry about customer info getting out. The cyberattack on CDK Global’s systems has everyone guessing what data hackers might have gotten to. The National Automobile Dealers Association is trying to get the full story from CDK to help dealers protect customer info.

Dealerships are trying to keep customers calm and trust them during this tough time. They’re using old-school methods and other solutions to keep going while CDK fixes things⁸. But, these fixes have their own problems and limits.

AutoNation and Lithia Motors are feeling the effects of the outage too⁸. Sonic Automotive says the issue will keep hurting its operations until everything’s fixed⁸. Car makers like Kia, Toyota, Stellantis, and Ford are helping dealers out, with Ford saying they have backup plans for sales and services⁹.

Even with the hurdles during the dealership outage, dealerships are staying strong and trying to lessen the blow to customers. Cox Automotive thinks sales will pick up in July after the outage⁸. But, we’ll have to wait and see how this affects customer trust and the whole industry.

Dealership Outage: Understanding the Causes

Cyberattacks on CDK Global have shown how vulnerable the car industry is. CDK Global helps nearly 15,000 car dealerships in North America¹⁰¹¹. The dealership outage has caused big problems, like inventory shortages and rising costs.

Supply Chain Disruptions and Inventory Shortages

The cyber issue at CDK Global has lasted for days, causing big losses¹⁰. It has hit dealerships of big car companies like Stellantis, Ford, and BMW¹¹. Dealerships are now facing supply chain problems and can’t keep up with demand.

Many dealerships are now doing things the old-fashioned way, like writing orders by hand¹¹. Without CDK software, tracking customer orders and sales is hard for workers¹⁰. Dealerships are going back to tracking parts manually because of the dealership outage¹⁰.

Rising Costs and Profit Margin Pressures

The dealership outage has led to higher costs and pressure on profit margins for dealerships. They’re spending more on manual processes and might lose sales. The global chip shortage makes it hard to get parts for cars and maintenance.

Workers in the automotive retail are worried about their pay due to the outage¹⁰. CDK’s problem stopped a car parts delivery driver from working and made them doubt their pay¹⁰. Dealerships are now under a lot of pressure to keep making money, finding new ways to deal with these issues.

Adapting to Changing Customer Expectations

The car-buying experience has changed a lot in the last 20 years. This change comes from new consumer needs and tech growth¹². Now, customers want smooth digital experiences. Dealerships need to adjust to these new wants while keeping tradition and innovation balanced.

Demand for Seamless, Digital-First Experiences

Today’s car buyers are well-informed and have a lot of power. About 44% look for advice from family, friends, and coworkers before buying¹². They spend about ten hours over three months looking at around 120 digital spots before making a choice¹². This shows how key it is to offer a smooth, digital-first experience that fits what buyers want.

Dealerships should use digital tools to let customers look at, customize, and buy cars online. This gives buyers more control and flexibility. Companies are putting money into digital partnerships to improve the buying experience. Dealerships need to do the same to stay ahead¹². By using new tech, dealerships can learn what customers like and offer a more personal experience¹². The issues during the dealership outage can be avoided by having a backup plan.

Balancing Tradition and Innovation in the Industry

It’s important to keep up with digital changes but also hold onto traditional values. Good service after the sale makes customers more likely to come back for their next car¹². Dealerships should work on building trust by offering great service both online and in person.

But, the industry is facing big challenges. COVID-19 has caused global supply chain problems and made it hard to get parts and cars¹³. Also, new tech like electric cars and self-driving features means staff need training¹³.

To overcome these issues, dealerships need to change old sales ways and focus on giving a better, more personal experience¹². Using CRM systems and personalized services can help build stronger customer relationships¹³. Being a trusted advisor, as talked about in “Dealership Diary: Your Roadmap to Success in Automotive” by Dominic Scruggs, can help dealerships succeed in this new world.

The Role of the Global Semiconductor Chip Shortage

The global shortage of semiconductor chips has deeply affected the automotive industry. It has caused big problems for making and stocking vehicles. In 2021, over 9.5 million units of car production were lost because of the chip shortage¹⁴. The third quarter of 2021 was the worst, with 3.5 million units not made¹⁴. By the first nine months of 2021, car production fell by 26% because of the chip shortage¹⁵.

This shortage has led to less inventory and higher prices for vehicles. This makes it hard for dealerships to keep up with customer demand. In 2022, another 3 million units were affected by the shortage¹⁴. By mid-2023, the losses from the shortage dropped to about 524,000 units worldwide¹⁴. Even so, the shortage is still a big problem for the industry.

Many things have made the chip shortage worse. The need for work-from-home tech during the COVID-19 lockdowns in 2020 was one factor¹⁵. The pandemic also caused problems in supply chains in South and Southeast Asia, like in Malaysia, which is big on chip packaging and testing¹⁵.

Changes in the auto industry, like more electric and automated cars, have also added to the shortage¹⁵. Car makers want chips that can handle more computing, which is needed for electric and self-driving cars. This means they need different chips than those used in PCs and phones¹⁵. By 2028, semiconductors in cars could cost about US$1,400 each, up from US$500 in 2020¹⁴.

But, there are signs things are getting better. In 2023, car production is expected to go up by 3%¹⁵. Europe might see a 5% increase in car production, which would be the biggest growth in the world¹⁵. More semiconductors are being made for cars and industrial uses, not just PCs and phones¹⁵.

S&P Global Mobility thinks 22 million units of car production could happen with the current chip supply¹⁴. They predict car sales will hit 83.6 million in 2023, but won’t go over 100 million until 2027¹⁴. By 2023, car production is expected to reach 85.6 million, but won’t go above 94 million until 2028¹⁴.

As the car industry deals with the chip shortage, dealerships need to adjust and find new ways to work better. Making processes more efficient, like car payoffs, can help dealerships work better and make customers happier during this tough time.

Creative Solutions for Dealerships to Navigate the Challenges

Automotive dealers face big challenges like dealership outage  rising costs and inventory shortages. They also deal with changing customer needs and fraud risks. In fact, 80% of dealers see growing costs as their top challenge in 2024¹⁶. But, dealerships can use creative solutions to overcome these hurdles and improve their work.

Optimizing Operations with Remote Video Monitoring

One good strategy is to use remote video monitoring. This tech gives real-time views of customer actions and traffic. It helps dealerships work better¹⁶. By looking at video data, managers can adjust staff, cut wait times, and boost efficiency. This tech also stops theft and vandalism, saving money on insurance and repairs¹⁶.

Enhancing Customer Service and Reducing Fraud

Video surveillance does more than just improve operations. It also makes customer service better. By watching how customers interact, dealers can find ways to get better and fix problems fast¹⁶. This makes customers happier and more loyal. Plus, video proof helps fight fraud by showing criminal acts, protecting dealers from false claims¹⁶.

The price of a new car hit $48,510 in April 2023, up 21% from the year before. Used cars also saw a nearly 17% price jump¹⁷. With prices going up and credit challenges for customers, dealers need to change to keep customers happy¹⁷. By using new tech like remote video monitoring, dealers can make their operations better, serve customers better, and cut fraud. This helps them succeed despite the challenges.

The Importance of a Multi-Layered Security Strategy

Recent FTC rules make a multi-layered security strategy key for auto dealers¹⁸. The CDK Global cyberattack hit over 15,000 dealers hard, showing how vital strong security is¹⁹. Data breaches can cause big financial losses, damage trust, and hurt a company’s reputation¹⁸.

Meeting security standards isn’t enough to keep data safe¹⁸. A multi-layered strategy is key for strong security¹⁸. It’s like the safety features in cars, protecting data in many ways¹⁸.

A good security plan goes beyond FTC rules¹⁸¹⁹. It should include strict data rules, automated scripts, and tech like AI and encryption¹⁸¹⁹. Training employees well can also lower the chance of mistakes¹⁹.

Dealerships need strong backup and recovery plans, as seen with CDK¹⁹. Regular backups help get things running fast after a breach. Having extra systems ready is key for keeping business going, even if main systems fail¹⁹.

By using a defense in depth, auto dealers can boost their security, lower risks, and make customers feel safe.

Going beyond just following rules is key to protect customer data and avoid fines¹⁸. Working with cybersecurity pros for checks and updates helps a lot¹⁹. Cyber insurance can also protect money if there’s a cyberattack, helping with recovery¹⁹.

The FTC Safeguards are just part of a bigger security plan¹⁸. Adding things like remote video surveillance helps dealers lower risks and save money¹⁸.

Conclusion

The recent dealership outage due to cyberattacks on CDK Global has shown how vulnerable the automotive industry is to digital threats. This outage caused big financial losses for dealerships, making sales stop and inventory systems go offline²⁰. Dealerships had to go back to old ways, like writing car orders by hand¹¹. Companies like Kia, Toyota, Stellantis, and Ford are helping dealerships get back on track²¹.

To overcome these issues, dealerships need to find new solutions and use a strong security plan. Using remote video monitoring is a smart way to improve operations, help customers, cut down on fraud, and increase security. This approach helps dealerships deal with outages and stay ahead in a digital world.

Dealerships should also focus on training employees on cybersecurity to spot and report strange emails or actions²⁰. Keeping software and systems updated with the latest security fixes is crucial to fight off known threats²⁰. As the car industry changes, dealerships that act fast and use good solutions will be ready for new customer needs and stay competitive.