The recent cyberattack on the dealership management system (DMS) CDK Global has sent shockwaves across the national retail automotive sector, affecting sales and other critical operations for an estimated 15,000 dealerships.
The unprecedented breach has highlighted the vulnerability of centralized systems, including payment processing, critical to maintaining revenue flow and business continuity.
We explore the CDK attacks, their impact on dealerships, and how standalone payment processors can help mitigate risk and ensure uninterrupted business operations in the face of such cyber threats.
CDK Global Cyberattacks
On June 19, 2024, CDK Global experienced at least two devastating cyberattacks. The onslaught involved hacking and ransomware, which resulted in the shutdown or damage to operations and the inability to create orders or complete purchases or sales. According to analysts from the economic research consultancy Anderson Economic Group, estimated direct financial losses to affected dealers totaled more than $900 million over three weeks.
Since the attack, a phased restoration has been underway. And while CDK expects to have all dealerships back online later this week (the week ending July 5), it’s clear significant damage has been done.
The Impact on Car Dealerships
In the wake of the CDK hack, many dealerships found their sales processes halted, inventory management systems offline, and customer data compromised.
Car dealerships operate on notoriously thin margins, with new vehicle sales often yielding single-digit profit percentages. The bulk of their revenue typically comes from these sales, making consistent transaction processing critical to their cash flow.
After-sale services like maintenance and repairs offer wider profit margins and are crucial to bolstering the bottom line but represent a smaller portion of overall revenue.
When both sales and service operations are disrupted simultaneously, as in this cyberattack, the financial impact can be severe. Even a brief downtime in processing transactions or accessing customer data can lead to significant revenue losses.
Tom Maoli, who runs a handful of dealerships in New Jersey, reported to his local CBS News affiliate that new car sales were down 50% in June due to the attack.
Additionally, citing data from J.P. Morgan, financial news and services website TheStreet.com reported that sales of dealer services and parts will bear the brunt of the outage given the significant losses of customer and inventory data.
Bowell Johnson, co-owner of Denver’s Len Lyle Chevrolet, underscored the point.
“The service department…couldn’t open up the computer and couldn’t input anything.”
“We just had to start handwriting tickets,” he added.
The Critical Role of Standalone Payment Processors
The disruptions experienced by many dealerships highlighted a crucial vulnerability: reliance on a comprehensive DMS.
In contrast, dealerships using standalone payment processors experienced fewer disruptions and could continue processing transactions, better protecting revenue and customer trust.
Standalone payment processors offer several key benefits:
- Enhanced Security: By keeping payment processing separate from other dealership operations, standalone systems dampen the impact of sales disruption. Even if other systems are compromised, payment processing can continue unaffected.
- Redundancy: Standalone systems provide a backup in case the primary system crashes. Dealerships can switch to their standalone processor to maintain transaction functionality.
- Specialized Support: Standalone payment processors often offer expert support, including fraud detection and prevention measures, enhancing overall security.
RevUpX: Your Dealership’s Independent Payment Powerhouse
While a DMS like CDK Global offers all-in-one solutions, RevUpX takes a different approach. We focus on what we do best: standalone payment processing tailored for car dealerships.
Why choose RevUpX over a DMS-integrated solution?
- Unmatched Flexibility: RevUpX works independently, meaning you're not locked into a single ecosystem. You can pair RevUpX with any DMS or change your DMS without disrupting your payment processing.
- Specialized Expertise: By partnering with fiserv, a global leader in payment technology, RevUpX delivers the same level of service trusted by over six million merchant accounts worldwide. This focused approach means RevUpX is always at the forefront of payment technology.
- Robust Security: RevUpX’s Clover POS systems and CardPointe virtual terminals feature advanced encryption, tokenization, and EMV® chip technology. This standalone setup means your payment data remains secure even if other dealership systems are compromised.
- Business Continuity: With RevUpX, your ability to process payments isn't tied to your DMS. If your primary systems go down, you can keep selling cars and processing transactions.
- Real-Time Insights: RevUpX’s cloud-based systems offer instant reporting and analytics, giving you up-to-the-minute data on your sales performance.
- Cost Savings: RevUpX provides zero-fee credit card processing through our custom cash discount and surcharge programs. This can significantly reduce your operating costs and boost profitability.
RevUpX for the Road Ahead
The 2024 CDK cyberattacks served as a wake-up call for the automotive industry, exposing the risks of over-reliance on integrated systems.
Standalone payment processors like RevUpX provide crucial safeguards, offering security, redundancy, specialized support, and continuous transaction functionality, even when other systems fail.
Beyond these security benefits, RevUpX goes further with its industry-leading cash discount and surcharge programs. These innovative initiatives enable dealerships to eliminate credit card processing fees, significantly cutting costs and directly boosting the bottom line.
Learn more about how RevUpX can help you safeguard your transactions, recapture savings, and boost profitability for your auto dealership.
