of CDK Global cyber attack The automaker’s June vehicle sales are expected to decline by about 100,000, or more than 7%, compared to the same period in 2023.
The projected decline is not a reflection of weak demand, but rather the expected consequence of some vendors’ reliance on CDK sales software for transactions. Many traders have been without full access to their systems for over a week, with no promise from CDK that they will be back up and running by the end of the month.
“A car dealership is fundamentally driven by its dealer management system, or DMS — it’s the financial backbone of these dealerships,” Tyson Jominy, vice president of data and analytics at JD Power, told CBS MoneyWatch. “It ties all parts of a dealership together, including new and used vehicle sales and financing. It’s a very important operating system.”
The interruption, which CDK said it was caused by a “rewarding event”, came at an inconvenient time for car buyers and sellers.
“June is one of the most important sales months for the auto industry and we expected sales to be quite strong,” said Jominy. “It’s part of the summer selling 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 that total new vehicle sales for June will ultimately reach 1,273,600, reflecting a 7.2% decline from June 2023. This includes car sales to regular customers as well as fleet sales for businesses or car rental companies.
On an annualized basis, this would reflect a sales rate of about 15 million units for the entire year, when the industry should be at 16 million, according to Jominy.
The average transaction price for new vehicles is $45,000, meaning the hit to sellers can be significant in dollar terms. Some car sales lost in June may occur in July, if CDK systems have been restored by then.
“Due to the disruption in dealers’ 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 figure for the month will be, given the ongoing uncertainty about when CDK systems will be fully restored.
“Sales will be delayed, but most will likely occur in July, as soon as the situation is corrected and sales are taking place despite the system outages,” King added.
Can I still buy a car now?
CDK powers business operations for 15,000 or more than half of all auto dealerships across the U.S. Dealerships that do not rely on CDK DMS are able to conduct business as usual and may even experience a growth in business, according to Jominy.
“If you really need the car, you can get another one, but you’ll have to find a dealer that uses one of CDK’s competitors’ products,” Jominy said.
Those traders who are clients of CDK are loved find 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 can take one home, but dealers are exempt in some cases from getting consumer approval for a loan or being able to finalize the transaction,” he said. Jominy. “A trader 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.”