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Car dealerships are in a state of chaos, with the process of selling and maintaining cars becoming a nightmare in showrooms and service centers across the United States and Canada.
Nearly two weeks ago, auto dealerships and service shops using CDK Global’s dealer management software (DMS) were operating in emergency mode, forced to adapt to drastic measures after their core product was taken offline in response to a widespread cyberattack.
However, there is light at the end of the tunnel for CDK and the merchants it serves, but not without some legal grievances that could see merchants and software providers in court.
Related: Analysts Have a Bleak Outlook for Auto Dealers After CDK Cyberattack
On July 1, CDK informed its dealer network that it expected service to be restored sometime in the next few days, as the crucial Independence Day sales holiday draws ever closer.
“We are continuing our phased approach to the restoration process and are working quickly to connect merchants to the merchant management system. We expect to have all merchant connections ready by late Wednesday, July 3 or early Thursday morning, July 4,” the company said in a statement.
The fallout from the cyberattack — now confirmed as a ransomware attack — has already left its mark on automakers. In a statement released early on July 2, Hyundai announced (hymn) Kia, Hyundai’s sister company, reported a decline in its U.S. sales in June compared to the same month in 2023, which it attributed to the cyberattack and service outage.
Hyundai Motor America CEO Randy Parker said in a statement that the company’s dealers were resilient “in the face of another industry crisis.”
This development comes as Analysts from JPMorgan The report expects some of the largest publicly traded auto dealer groups to see a 7% to 10% drop in earnings per share once they report their second-quarter 2024 earnings results. The six dealer groups mentioned in the report include Asbury Automotive Group, Asus, Cargo… (arterial blood gases) Autonation Company. (that) Group 1 Automotive Co., Ltd. (GBI) Lithia Motors, Inc. Lithia, Sonic Automotive. (I forgot) And the Penske Automotive Group. (Bag) They all use CDK DMS in one way or another.
More cars:
- Maserati CEO Defends In-Car Feature That Drivers Hate
- Federal government skeptical about safety of popular driver-assistance technology
- Young people who like loud cars are more likely to have a mental disorder, a study suggests.
Legal issues
While there is light at the end of the tunnel for CDK Global, the positive news does not negate the fact that numerous lawsuits have been filed by auto dealers, service shops, and car buyers as a result of the cyberattack.
On June 25, Jay Kay Collision Center, an independent repair shop based in Illinois, filed a lawsuit against CDK Global in the U.S. District Court for the Northern District of Illinois, alleging that the outage made it difficult for the shop to order parts and conduct business.
As is the case Car newsThe lawsuit seeks class action status, seeking to offer an olive branch to anyone in the United States “who used or relied on Defendant’s services and was harmed as a result of the data breach.”
“The outage has delayed critical business functions, disrupted businesses, resulted in significant costs to develop workarounds, and potentially exposed their sensitive personal and financial information to criminals,” the lawsuit states.
in separate lawsuit Florida-based Formula Sports Cars, Georgia-based Prestige Motor Car Imports, Bill Holt Chevrolet of Blue Ridge, and Florida residents Annie Ortiz and Alexis Pino filed for class-action status in the Southern District of Florida on June 30. The company seeks to represent other dealers and retail employees.
The group alleges that incidents involving CDK compromised private data and information and harmed the businesses of auto dealers and their employees.
“This negligence resulted in significant breaches that impacted countless individuals across the United States who purchased or serviced a vehicle or worked at any commercial location with their personal data stored and made available within CDK systems,” the lawsuit states.
“The ramifications of this failure are far-reaching, exposing sensitive information to cybercriminals and causing irreparable damage to the reputation and trust of affected parties.”
In the lawsuit, Florida-based car buyers Annie Ortiz and Alexis Pino alleged that they purchased vehicles from car dealerships where CDK software was used and were required to hand over information “directly or indirectly” to the software company, including “their name, address, Social Security numbers, driver’s licenses, and financial details such as credit card numbers and bank account information.”
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