Some of the largest auto dealers in North America are warning of a potential “material” impact to their finances from a cyberattack that has slowed operations at thousands of stores.
Sonic Automotive Inc. and Penske Automotive Group Inc. filed disclosures with the US Securities and Exchange Commission on Friday. Group 1 Automotive Inc., AutoNation Inc. and Lithia Motors Inc. followed Monday. All five companies use CDK Global, whose so-called dealership management system was halted a week ago after a crippling hack.
The disclosures represent the first sign of potential widespread economic impact stemming from the attack against CDK, which serves roughly 15,000 North American car dealerships. The incident is part of a growing phenomenon in which financially motivated cybercriminals have attacked critical links in the global IT supply chain — the plumbers of the Internet that you might least suspect as targets, bringing down entire industries along with them.
Shares in Sonic, Group 1, AutoNation and Lithia have all declined since the hack. Penske shares have risen up 2.8% since Wednesday as the company had previously said its dealerships weren’t affected.
The hacking group demanded a ransom in the tens of millions of dollars from CDK, which was planning on paying, a person familiar with the matter said Friday. CDK confirmed over the weekend that the attack was a case of ransomware and said it was now working to restore systems, a process that it said was expected to take “several days and not weeks.”
The incident “has had, and is likely to continue to have, a negative impact,” Sonic said in its filing. The company hasn’t yet determined whether the incident will have a material effect on its finances. Sonic shares have fallen nearly 3% since the hack.
Here is what other companies are saying about the business impact of the attack:
- Penske said it uses CDK’s software for its Premier Truck Group division — but not its US or international automotive dealership operations. The truck dealership business represents lower unit volumes than its automotive dealership division, the company said.
- Group 1 said its “ability to determine the material impact, if any, of the CDK incident 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 about 2% since Wednesday.
- AutoNation said that the service interruption has been “disruptive and adversely impacted” its business. All of its locations remain open are continuing to sell, service and buy vehicles. But they’re experiencing “lower productivity,” the company said. AutoNation stock is down 4.3% since the hack on Wednesday.
- Lithia it’s “reasonably likely” that the hack has had a material impact on its finances, even though its dealerships continue to operate. The stock is down 0.5% since the attack.
CDK provides software that helps dealers manage customer records, schedule appointments, handle car-repair orders and complete transactions, among other tasks. CDK has yet to restore full service, and the outage has forced dealers to halt or delay some services and resort to pen and paper.
— By Dana Wollman (Bloomberg)
