'Years To Correct': Auto Dealers Continue To Face Negative Impact From Ransomware Attack

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by Tyler Durden
Tuesday, Jun 25, 2024 - 06:20 PM

Since a cyberattack paralyzed 15,000 auto dealerships nationwide last week, a clearer understanding of the damage has emerged. Several of the largest US dealers are now detailing the potential "material" impact on their finances in regulatory filings since their backend operating systems, managed by CDK Global, went down early last week. 

Bloomberg reports Sonic Automotive Group, Group 1 Automotive, AutoNation, Lithia Motors, and Asbury Automotive Group have filed disclosures with the US Securities and Exchange Commission in recent days, specifying that their backend management systems, powered by CDK, have been disrupted since the cyber incident, negatively impacting their business.

The incident "has had, and is likely to continue to have, a negative impact," Sonic wrote in the SEC filing. 

Here's more color on what auto dealers are saying in the filings (courtesy of Bloomberg):

  • Group 1 said its "ability to determine the material impact, if any, of the CDK hack and the resulting service outage, will ultimately depend on a number of factors, including when, and to what extent" it can resume access to CDK's systems. Group 1 shares have declined 2.5% since Wednesday.

  • AutoNation said that the service interruption has been "disruptive and adversely impacted" its business. All of its locations remain open and are continuing to sell, service and buy vehicles. But they're experiencing "lower productivity," the company said. AutoNation stock is down 5.6% since Wednesday.

  • Lithia said it has "not yet determined whether the incident is reasonably likely to materially impact" its finances. The company said its dealerships continue to operate but noted that the hack has had a negative impact on business operations. The stock is down 0.4% since the attack.

  • Asbury Automotive said some parts of its business operations are functioning "slower than normal." The company's Koons Automotive sites in Maryland and Virginia don't use CDK's dealer or relationship management systems, so they're operating with "minimal interruption." Asbury hasn't yet determined whether the hack will have a material impact. Shares have declined 1.4%.

Shares of Sonic, Group 1, AutoNation, Lithia, and Asbury have all declined between 1.5% and 5% since the ransom attack, in which Bloomberg said the cyber gang involved was BlackSuit and demanded millions of dollars from CDK

X users Car Dealership Guy reports Tuesday afternoon, "Dealership outages will continue until at least June 30th." 

But some dealers, such as the Mazda dealership in Seekonk, Massachusetts, where Ryan Callahan, the manager, told CNN: "The financial impact it will directly have on us will take months to correct, if not years."