Cyber attack sends US auto dealers back to paper forms

US auto dealers grappled with an ongoing cyber attack-led software outage on Monday, with some reverting to manual paperwork as car industry technology provider CDK worked to restore systems used by more than 15,000 retail locations.

The outage impacting CDK's dealer management system, used to complete deals, track store profitability and monitor employee compensation, has "plunged the auto retail industry into disarray," JPMorgan analysts said last week.

AutoNation, a leading auto retailer in the US, said the outage was disruptive and had adversely impacted its business, though its outlets remain open, continuing to sell, service, and buy vehicles.

Peer Lithia Motors LAD.N said on Monday it had experienced disruptions in its CDK-hosted system in North America, and that the incident was likely to have a negative impact on its business operations till the systems are fully restored.

Jim Seavitt, owner of Village Ford dealership in Dearborn, Michigan, said the outage has so far not dampened sales, but it has made the process of getting cars to customers more laborious.

The dealership sold nearly 100 cars during a large sale it put on last week, Seavitt said, but because CDK generates the paperwork needed to formally pass the car off to the customer, those vehicles are in limbo.

Seavitt expects the vehicles to be transferred this week after his team developed other ways to complete the necessary paperwork. CDK has told him that services will likely be down until mid-week.

“We don’t want to see this thing drag on,” Seavitt said.

CDK, which reported the outage last week, said on Monday it had begun the restoration process, reiterating that it will take several days to complete.

AutoNation and peer Group 1 Automotive said they were using alternative processes such as manual paperwork to conduct their business. Both said they had taken precautionary steps to protect their data.

"The timing of the restoration of other impacted CDK applications remains unclear at this time," Group 1 said in a statement.

Bloomberg News reported on Friday that a group of hackers claiming responsibility for the attack on CDK's software systems had demanded millions of dollars in ransom to put an end to the hack.

Seavitt said he hopes CDK pays the ransom so dealers can resume business as usual.

Though auto retailers have not outlined any sales hit, analysts have flagged a possible impact. "We note some potential risk to late-June (US auto sales) volume from the reported CDK dealer disruptions," Citi analysts said in a note last week.

Auto retailer Sonic Automotive SAH.N last week said the CDK outage was likely to have a negative impact on its business operations until the systems were fully restored. — Reuters