The CDK Global cyber attack is expected to reduce dealership vehicle sales by about 100,000, or more than 7%, in June compared to the same period in 2023.
The expected decline does not reflect weak demand, but rather the expected consequence of some dealers’ reliance on CDK’s sales software for transactions. Many dealers have not had full access to their systems for over a week, with no promise from CDK that this will be the case. be operational again by the end of the month.
“A car dealership is essentially run by the dealer management system, or DMS, which is the financial backbone of those dealerships,” Tyson Jominy, vice president of data and analytics at J.D. Power, told CBS MoneyWatch. “It ties together all the parts of a dealership, including new and used vehicle sales and financing. It’s a very important operational system.”
The glitch, that one CDK has said it was caused by a ‘ransom event’ came at an inconvenient time for car buyers and sellers.
“June is one of the key sales months for the automotive industry, and we expected sales to be quite strong,” Jominy said. “It’s part of the summer sales season, when families come home from school and want a new car to take on a road trip.”
Fewer cars are sold in June
JD Power estimates that total new vehicle sales in June will be 1,273,600, which is on the low side. This is a decrease of 7.2% compared to June 2023. That includes sales of cars to regular consumers, as well as sales of fleets to companies or car rental companies.
On an annualized basis, that would reflect a sales rate of about 15 million units for the full year, while the sector should be at 16 million, according to Jominy.
The average transaction price for new vehicles is $45,000, meaning the damage to dealers in dollar terms could be substantial. Some of the auto sales lost in June could occur in July CDK systems will be restored by then.
“Due to disruptions to dealer software systems, June sales will not reflect actual consumer demand for new vehicles,” Thomas King, president of J.D. Power’s data and analytics division, said in a statement. “Instead, a significant number of sales that would have occurred in June will now likely occur in July.”
He added that there is still significant variation in what the official sales figures for the month will be, given the continued uncertainty over when CDK systems will be fully restored.
“Sales will be delayed, but the bulk will likely occur in July, shortly after the situation has recovered and sales continue despite the system outage,” King added.
Can I even buy a car now?
CDK handles the operations of 15,000 car dealers in the US, representing more than half of all car dealers. According to Jominy, dealers who are not dependent on CDK’s DMS can continue their business as usual and may even experience an increase in sales.
“If you really need a car, you can still buy one, but you have to find a dealer that uses products from CDK competitors,” Jominy said.
The dealers who are CDK customers have had to do that find solutions to transact with customersincluding manually recording sales with pen and paper.
“If you’re a consumer and you go to a dealership, the cars are still there and you may be able to take one home, but dealers in some cases can’t get approval from consumers for a loan, or be able to complete a transaction,” Jominy said. “A dealership without a DMS system is kind of like hockey without skates. You can still play, but it’s a lot slower and harder to do.”
