Back in late June, CDK Global – a company that serves roughly 15,000 automotive dealerships in the U.S. – shut down most of its systems following a cyberattack that occurred early one morning, though it was promptly hit with another attack just a few days later. It took some time to sort that problem out after a group of hackers in Eastern Europe demanded a hefty ransom in exchange for halting its attacks, and CDK’s systems just came back online earlier this month, a bit later than originally expected. Now, according to a new report, it seems as if the economic impact stemming from this attack is rather significant, too.
According to the automotive consulting firm Anderson Economic Group (AEG), the CDK cyberattack/ransomeware attack is estimated to have resulted in a direct, total loss of $1.02 billion for franchised auto dealers. The attack began back on June 19th and wasn’t rectified until July 5th, and over that short three-week time span, led to lost earnings from approximately 56,200 vehicle sales, along with lost parts and service earnings, increased IT service costs, higher floor plan interest costs on inventory, and additional staffing costs. That figure doesn’t exclude damages to consumers, reputational damages for dealers, litigation costs, and a handful of other, similar categories, however.
“This has been a painful experience for dealerships and customers. The sales data for June confirms what we were anticipating two weeks ago,” said Max Melstrom, part of the AEG team that estimated the losses. “This episode is a wake-up call for the auto industry, and a warning to all others,” added Patrick Anderson, CEO of Anderson Economic Group. “Businesses that rely upon automated systems and centralized software – which means nearly all businesses – are vulnerable to hacking of systems managed by outside providers, and the losses caused by an outage can escalate quickly.”
While these losses vary depending from dealer to dealer and could very well be revised in the future, it’s clear that this incident had a tremendous impact on the industry as a whole, regardless. As Ford Authority reported last week, CDK did recently inform its customers that it will compensate them financially for this disruption in the near future, but it’s unclear what that retribution might look like at this time.
We’ll have more on the fallout from this cyberattack soon, so be sure and subscribe to Ford Authority for 24/7 Ford news coverage.
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