CDK updates dealers on status of sales software restoration after cyberattack

Car Dealers Reel From Cyberattack On $1.2 Trillion Market

CDK Global, the company that powers sales for thousands of car dealerships across the U.S., says it has restored systems for a small group of dealers after it was hacked last week in what it later described as a "ransom event."

"We have successfully brought a small initial test group of dealers live on the Dealer Management System (DMS), and once validation is complete we will begin phasing in other dealers," the company said in a statement to CBS MoneyWatch late Wednesday. A CDK spokesperson did not indicate how many dealerships were part of the initial test group whose systems have been restored.

"We are also actively working to bring live additional applications — including our Customer Relationship Management (CRM) and Service solutions — and our Customer Care channels," the company said, adding that it appreciates the urgency of the situation for its customers.

According to a Bloomberg report, CDK is planning to pay a ransom to the group behind the hack, believed to be called BlackSuit, to end the outage. CDK has not indicated whether it has made a payment to the group, or not.

Geoffrey Pohanka, chairman of Pohanka Automotive Group, based in Capitol Heights, Maryland, told CBS MoneyWatch that his business is not among the small number of dealers with CDK systems back up and running Thursday.

Instead, the tools his dealerships rely on to make sales, keep track of inventory and manage customer relationships, have been inoperative for more than one week — throwing a wrench in his vehicle and auto parts sales and repairs business.

"We are still doing the workarounds, using a paper processing system. The problem is we can't load this data back into the system," Pohanka said. "We can account for the work we did in our general ledger from a financial statement standpoint, but it's very hard to pop all this data back into the system so you can have access to it later."

CDK had previously told dealers not to expect all of their systems to be up and running by the end of June.

"We do feel it's important to share that we do not believe we will able to get all dealers live prior to June 30," CDK Global said in a recorded message on a helpline and in a memo sent to dealerships Tuesday.

Pohanka is hoping his dealer management system will be operational by the first week of July.

"We have to close out each month with manufactures and it's going to be hard if it's not operating within the first week of the month," he said. "But we'll figure it out, we're going to have to, we don't have a choice."

On Wednesday, data analytics firm J.D. Power said it was forecasting new vehicle retail sales for June to decrease by up to 8.2% compared with the same month one year earlier. The anticipated dip is not a reflection of consumer demand, but rather the impact of the CDK outage on customers. Sales that would ordinarily have occurred this month are expected to take place in July, according to J.D. Power.

"Because of the disruption to dealer software systems, June sales will not be reflective of actual consumer demand for new vehicles," Thomas King, president of data and analytics at J.D. Power said in a statement. "Instead, a significant number of sales that would have occurred in June are now likely to occur in July."