The cyberattack on CDK Global, the software provider for car dealerships across the US and Canada, led to system outages for auto dealers across North America. Meanwhile, prices for new cars remain well above pre-pandemic levels.
CoPilot founder and CEO Pat Ryan joins Asking For A Trend to give insight into the CDK hack and why auto prices haven’t decreased at a faster rate.
“It really threw the industry back to the Stone Age in a lot of ways because with the systems locked down, they [car dealerships] couldn’t do business the way they are,” Ryan says on the hack. “These are typically their systems of record. And as their systems of record, they’re kind of a hub for everything that they do.”
In turn, the cyber breach inhibited customers’ ability to check car prices and for the dealers to update their websites and pricing.
“You couldn’t get information to send loans to the banks. I mean, it just gummed up everything and, now, it happened at a time that the market’s been slowing, but dealers feel a lot of headwinds,” Ryan says.
Ryan points to “structural increases in car prices” leading consumer pressures: “We’re still up over 30% from pre-COVID. So there’s sticker shock for people who have bought a car since before COVID. And then when you add in that most cars are bought with financing, about 80% of cars. And so when your car is bought with financing, interest rates go up and prices go up. That has a compounding effect that has really made them unaffordable.”
For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.
This post was written by Nicholas Jacobino
