June Auto Sales Hit a Pothole: CDK Outage Causes Industry Slowdown
Sales of new vehicles in the U.S. are expected to encounter a significant dip this month compared to June 2023, and the culprit is neither consumer disinterest nor an economic downturn. Instead, the finger is pointed directly at a massive software outage at CDK Global, a major provider servicing thousands of dealerships across the nation. According to a recent report, this technological hiccup has sent ripples through the automotive retail sector, causing some dealerships to revert to the Stone Age method of manual paperwork, while others have had no choice but to shutter their operations temporarily.
A joint forecast released by J.D. Power and GlobalData has shed light on the scale of this impact. The forecast projects that new-vehicle sales in June could range between 1,336,800 and 1,273,600 units, marking a 2.6% to 7.2% decrease compared to the same month last year. It appears that the software outage, which commenced on June 19, has thrown a sizeable wrench into the wheels of car sales, leaving dealers scrambling to navigate their business without the digital tools they rely on.
Thomas King, the president of the data and analytics division at J.D. Power, provided some clarity on the situation. He emphasized that June sales figures would not accurately reflect the genuine consumer demand for new vehicles. In fact, many of the sales initially anticipated for June are now expected to spill over into July, essentially creating a sales bottleneck. This delay underscores the profound reliance of dealerships on seamless software operations to maintain their sales flow.
The duration and resolution of these system outages remain shrouded in uncertainty. King cautioned that a wide range of sales outcomes are possible, depending on when the cyberincidents are fully resolved and what temporary measures dealers implement to keep transactions afloat. This unpredictability has left the industry holding its breath, keenly awaiting the restoration of normalcy.
CDK Global, which provides essential software services to over 15,000 retail dealer locations across North America, reportedly suffered from two cyberincidents last week. Since taking their systems offline, many dealerships have found themselves in limbo, unable to operate at full capacity. In an update to its dealership clients, CDK stated that it does not expect to have all customers fully operational before Sunday. This prolonged disruption has not only hampered sales but also exposed the vulnerability of the automotive retail sector to technological disruptions.
As the month progresses, both dealers and consumers are hoping for a swift resolution to this digital debacle. Once operations are fully restored, there is optimism that sales will rebound, although dealerships might still be feeling the aftershocks for some time. In the meantime, the automotive industry continues to navigate these choppy waters, with everyone eagerly awaiting a return to smoother sailing.
