Introduction

The car industry’s accounting offices are suffering greatly as a result of the recent CDK Cyber Attack Global, which also brought attention to weaknesses in dealership management systems (DMS). This incident has shown how important it is to have strong cybersecurity protections in place because dealerships rely significantly on generating accurate monthly financial statements.

Context of the CDK Cyber Attack

The cyberattack happened after a number of acquisitions and mergers. Cobalt, a business that specializes in digital marketing services, merged with DMS provider ADP Dealer Services. After thereafter, this company amalgamated with CDK Global, attracting investments from private equity firms. The attack on Infosec, which was viewed as a cost center, resulted in the departure of important security staff.

Effect on Auto Dealerships

The ransomware assault made a number of serious infrastructure flaws in the dealerships visible. Many have numerous single points of failure, out-of-date backups, no disaster recovery strategies, and none at all. Due to their lack of preparation, CDK was forced to pay a ransom of millions of dollars in order to get the hacked data back.

Problems with the Program for “Preferred Vendor”

Another program that was linked to the attack was the “Preferred Vendor” program, which was promoted as a list of carefully screened vendors. There are significant doubts regarding the efficacy of the program and the security it is meant to provide because security audits and routine vendor monitoring are missing.

Reasons for the Attack

The assault on CDK can be linked to its antiquated systems and deficiency of creativity. Cost-cutting measures taken by corporations resulted in weaknesses being revealed, making sensitive data vulnerable to hackers. The attempt to save costs led to insufficient cybersecurity safeguards, which eventually compromised the system as a whole.

Recuperation and Reinvention

Ideally, a well-established DMS provider should be able to return functionality in less than a day. This objective is unachievable, though, due to CDK’s shortcomings in backups, redundancy, distinct servers, and siloed databases. In order to restore order, dealerships now have the difficult chore of stitching together thousands of financial data.

Manual Restoring of Data

Following a ransomware attack, the restoration process is labor-intensive and necessitates the manual entry of every single transaction that occurred during the outage. Weeks or even months may pass during this process, depending on the volume of transactions. To guarantee accuracy, vehicle and part inventories must be verified. In their General Ledger (GL) accounts, manual entries should be duly reported if they are all accurate. Reconciliation of the financial accounts is an excellent place to start for checks and balances.

Financial and Legal Consequences

The relationship between the seller, manufacturer, and dealer has been seriously compromised. Although technology is an efficient tool, it needs to be backed by strong crisis management procedures. As a manufacturer’s chosen partner, CDK may be sued by dealers for obstructing trade, by consumers for the significant data breach, and by employees for violating data privacy and suffering lost wages. Dealers are recommended to get in touch with their Cyber Liability Policy insurer to talk about potential claims and find out whether they have coverage for contingent business interruption.

Proceeding Forward

This incident has damaged dealerships’ confidence in the DMS vendor’s ability to protect their data, which will have a long-term impact on operations and trust. It is advised that dealerships consult with knowledgeable specialists in order to create a long-term strategy for data protection and breach procedures. After documents are restored, investigating other DMS options should be taken into account to guarantee future resistance to cyberattacks.

Conclusion

A clear reminder of the value of cybersecurity and the necessity of thorough disaster recovery strategies is provided by the CDK cyberattack. The automotive industry’s dependence on technology highlights the vital function of safe data management. Dealerships need to emphasize data security going forward and set up strong procedures to guard against security breaches.

FAQs

What effects did the CDK Cyber Attack have on dealerships right away? 

The CDK Cyber Attack revealed several sources of failure, antiquated disaster recovery strategies, and a deficiency in backups in the dealerships’ systems. As a result, millions of dollars were paid in ransom to get the data back.

How was the “Preferred Vendor” program connected to the attack, and what does it actually do? 

A list of pre-screened providers is what the “Preferred Vendor” program purports to offer. Nonetheless, the absence of frequent monitoring and security audits prompted concerns about its efficacy and added to the attack’s exploitable weaknesses.

What were the primary reasons behind the CDK Cyber Attack? 

The CDK Cyber Attack was mostly caused by out-of-date software and a dearth of creativity, which were made worse by cost-cutting tactics that jeopardized cybersecurity.

How much time will it take dealerships to bounce back from CDK Cyber Attack? 

Depending on the number of transactions that need to be manually entered and confirmed in CDK Cyber Attack, recovery may take weeks or months.

What legal measures might CDK be subject to after the CDK Cyber Attack? 

Dealers for obstructing trade, customers for the data leak, and staff for breaching data privacy and not getting paid might all sue CDK.

What actions are dealerships supposed to take going forward? 

Dealerships can secure future resilience against cyber risks by consulting experts, implementing strong data security and breach processes, and investigating alternative DMS solutions.