CDK Global Cyberattack Leaves Thousands of Car Dealers Spinning Their Wheels

Bel Air dealer among national companies affected by cyber attacks


Bel Air dealer among national companies affected by cyber attacks

02:11

Car dealers in the US are floundering after cyber attacks this week on CDK Globala maker of software used to run their businesses made it virtually impossible to sell vehicles.

Tom Maioli, owner of Celebrity Motor Car Company, which operates five luxury car dealerships in New York and New Jersey, told CBS MoneyWatch that his business is “completely closed.”

“We can't process the paperwork. Everything is frozen, everything is stuck – we can't move money back and forth to pay off cars, to finance our customers' transactions,” he said.

Such disruptions are especially damaging to sales-driven businesses like car dealerships, where car buyers ready to put their money on a car may walk away when faced with frustrating delays. Maioli said that while he tries to keep customers engaged, he has no idea when his sales systems will be fully functional again, leaving the company in limbo.

The company's dealer management system, used by about 15,000 dealers, remained unavailable Thursday and Friday, causing headaches for dealers and potential car buyers.

For one New Jersey family, the outage meant they couldn't drive away in their new Audi Q5. Daniel Lanni told it Bloomberg his family expected the vehicle to be delivered on June 19, but it now remains unclear when they will take possession of the vehicle.

“The kids were very excited,” Lanni, a 41-year-old commercial real estate agent, told Bloomberg. “They are angry and now just ask about it regularly.”

On Wednesday, CDK Global suspended its services as a precaution, effectively halting sales for its customers. A second cyber attack this week has exacerbated the problem.

CDK has indicated that the outage could last several days and has not publicly announced when it expects its services to be fully restored. The financial impact of the technical failure is expected to be significant, as CDK powers sales for about half of the car dealerships in the US.

“Royal Pain in the Backside”

Geoff Pohanka, chairman of Pohanka Automotive Group, told CBS MoneyWatch that 20 of the company's dealerships rely on CDK's dealer management system, or DMS, to operate.

“We are very dependent on the DMS and it affects all parts of our business,” he said. “It generates all of our forms. When you come in, we enter you into the system, it builds a file in terms of paperwork and financial paperwork, and right now none of that is working.”

Pohanka, who said the dealership still has phone and internet service, said the company is doing its best to keep sales going. “We may not be able to get all the documents signed and will have to bring the customer back to complete them, but we can still function,” he said, admitting that “everything takes longer. [and] is more complicated.”

The DMS outage also affects the company's service and parts department. Typically, the dealer uses CDK software to generate electronic contracts and print work orders. Now they work manually, which is slower.

“We will definitely lose sales because it will take longer to complete transactions, and some things will fall through the cracks. There will be losses,” Pohanka said. “It's grueling, and the longer it goes on, the harder it will be for the dealers. I know we'll lose revenue. It's really a royal pain in the rear.”

Sport Honda, a Honda dealer and CDK customer in Silver Spring, Maryland, is also trying to continue serving customers.

“It's a difficult task, but there was paper before there were computers, so we have to approach it that way,” a dealer manager told CBS MoneyWatch. “You can go through the computer software and go back and do things like you used to.”

Employees from other dealers started working on this social media forums to say they tracked orders on “sticky notes” or used Excel spreadsheets to record transactions.

For CDK, the consequences may not only be of a technological nature. Maioli, the owner of the car dealership, said he has legal counsel and is considering filing a class-action lawsuit against the company.

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