The CDK global cyber attack Auto dealer vehicle sales are expected to fall by about 100,000 in June, or more than 7%, compared to the same period in 2023.
The expected decrease does not reflect weak demand, but rather the expected consequence of some dealers' reliance on CDK sales software for transactions. Many resellers have been without full access to their systems for over a week, with no promise from CDK that they will. back to work at the end of the month.
“An auto dealership is basically managed by its dealer management system, or DMS; it's the financial backbone of that dealership,” Tyson Jominy, vice president of data and analytics at JD Power, told CBS MoneyWatch. “It connects all the parts of a dealership, including new and used vehicle sales and financing. It's a very important operating system.”
The blackout, that CDK has said it was caused by a “rescue event”. it came at an inopportune time for car buyers and sellers.
“June is one of the biggest sales months for the auto industry, and we expected sales to be quite strong,” Jominy said. “It's part of the summer sales season, when families get out of school and want a new car for a road trip.”
Fewer cars will be sold in June
JD Power estimates total new vehicle sales for June will reach 1,273,600 on the low end, reflecting a 7.2% decline from June 2023. This includes car sales to regular consumers, as well as fleet sales 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, when the industry should be at 16 million, according to Jominy.
The average transaction price for new vehicles is $45,000, meaning the impact on dealerships could be substantial in dollar terms. Some car sales lost in June could come in July, yes CDK systems are then restored.
“Due to the disruption in dealer software systems, June sales will not reflect actual consumer demand for new vehicles,” Thomas King, president of JD Power's data and analytics division, said in a statement. “Instead, a significant number of sales that would have occurred in June are now likely to occur in July.”
He added that there is still considerable variability in what the official sales count for the month will be, given the current uncertainty about when CDK systems will be fully restored.
“Sales will be delayed, but the majority will likely occur in July shortly after the situation is rectified and sales are made despite system disruptions,” King added.
Can I even buy a car now?
CDK powers the business operations of 15,000, or more than half, of all US auto dealerships. Dealerships that don't rely on CDK's DMS can do business as usual, and could even be experiencing an increase in business, according to Jominy. .
“If you really need a car, you could still get one, but you'd have to find a dealer that uses one of CDK's competing products,” Jominy said.
Those dealers who are CDK customers have had to find alternative solutions to transact with customersincluding recording sales manually with pen and paper.
“If you're a consumer and you go to a dealership, the cars are still there and you might be able to take one home, but the dealerships can't in some cases get consumer approval to get a loan or be able to complete the transaction.” , said Jominy. “A dealership without a DMS system is a bit like playing hockey without skates. You can still play, but it will be much slower and harder to do.”
