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Hackers Demand CDK Pay Millions In Ransom To End Auto-Dealer Cyberattack
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Update (Saturday):
New details about the CDK Global hack have surfaced through a Bloomberg source, indicating that a hacking group in Eastern Europe is likely responsible for the cyber incident. The group demands tens of millions of dollars in ransom, as the hack has paralyzed thousands of auto dealerships across the US.
Here are more details from the report:
CDK is planning to make the payment, said the person, who asked not to be identified because the information is private. The hacking group behind the attack is believed to be based in eastern Europe, the person said. In the early days of any ransomware attack, discussions are fluid, and the situation could change. -Bloomberg
On Friday, Diana Lee, the chief executive officer of Constellation, a marketing agency with strong ties in the auto industry, told the host of Bloomberg TV that the cyber incident is "just mass chaos at this point ... and worse than Covid."
"The dealer's required to actually run a DMS for sales, service, parts, for every single functionality — even stocking a vehicle, you can't do it without the DMS system. So it is a disaster," Lee said.
The cyber incident has paralyzed about 15,000 car dealerships in an industry that hit $1.2 trillion in sales last year.
Last week, some dealers closed, while others resorted to processing paperwork by hand.
What a mess for the auto industry. We assume auto analysts will be writing notes early next week about what's next for the industry.
Still, CDK has provided no timelines for when core systems will be restored.
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Over 15,000 auto dealerships nationwide face major disruptions due to an ongoing cyberattack for the third day, shutting down their backend management systems. This has halted sales for some dealers and forced others to complete transactions the old-fashioned way: by hand.
CDK Global, the leading provider of dealership management systems and digital retailing solutions, said cybersecurity breaches began on Tuesday. By Wednesday afternoon, CDK's core systems were restored, only to be shuttered on Thursday after a second hack attack. This has made it nearly impossible for thousands of dealers to buy and sell vehicles this week.
"We cannot process paperwork. Everything is frozen, everything is tied up — we cannot move money back and forth to pay off cars, to finance our customers' transactions," Tom Maioli, who owns Celebrity Motor Car Company with dealerships across York and New Jersey, told CBS MoneyWatch. He said his business is "completely shut down."
Maioli continued, "We cannot process paperwork. Everything is frozen, everything is tied up — we cannot move money back and forth to pay off cars, to finance our customers' transactions."
Consumers are being greeted with signs like this at auto dealers nationwide...
On Thursday, X user Car Dealership Guy was featured on CNBC. He said the auto industry's biggest question after all of this chaos is: "Will the industry continue centralizing and consolidating technology? This has been the biggest trend in auto retail."
Such disruptions have forced back-office support staff to write orders and complete paperwork without computers (clearly first-world problems).
"My selling team can hand-write a buyer's order," Brian Benstock, general manager of Long Island City-based Paragon Honda and Paragon Acura dealership, told CNN.
There have been no reports (yet) of foreign adversaries involved in the cyber breach. Also, CDK has provided no timeline for when core systems will be restored.
A lingering concern is the economic fallout from this cyber incident, given the size of the auto industry's size.
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