The Cost of Poor IT Practices in Automotive Dealerships

Overview

In today’s technology-driven automotive industry, dealerships rely heavily on IT systems to manage operations, customer relationships, inventory, financing, and service workflows. Yet many dealerships lack formal IT best practices, making them vulnerable to serious operational disruptions, data breaches, and financial losses. A stark example of this risk materialized with the CDK Global ransomware attack, which paralyzed dealership operations nationwide and highlighted the critical importance of cybersecurity and IT governance in the retail automotive space.

Background: The CDK Ransomware Attack

In June 2023, CDK Global, a leading provider of Dealer Management Systems (DMS) used by over 15,000 dealerships, was hit by a major ransomware attack. The attack led CDK to shut down its core systems for multiple days. As a result, thousands of dealerships across the United States were left without access to critical applications, including service scheduling, parts ordering, financing, and sales management.

Dealerships scrambled to use pen-and-paper workarounds and manual invoicing just to keep doors open. Many reported losses in daily revenue, major delays in service operations, and frustrated customers.

Key Impacts of Poor IT Practices in Dealerships

Operational Paralysis

Without a robust business continuity or disaster recovery plan, many dealerships couldn’t process transactions, print repair orders, or access customer data. Downtime cost some dealers tens of thousands of dollars per day in lost sales and service revenue.

Customer Trust Erosion

Inability to deliver promised service timelines and missing vehicle history or financing data resulted in customer dissatisfaction and reputational damage. The incident showed how dependent the customer experience is on reliable IT systems.

Financial and Legal Risk

Ransomware attacks can involve sensitive customer PII (personally identifiable information). Without proper safeguards, dealerships risk noncompliance with privacy laws and face class-action lawsuits or regulatory fines.

Lack of IT Governance

Many dealerships rely entirely on third-party vendors without internal checks, audits, or a comprehensive cybersecurity strategy. Without internal accountability, dealerships often don't realize vulnerabilities exist until it's too late.

Lessons from the CDK Crisis

Vendor Dependence is Not Risk Elimination

CDK’s position as an industry leader didn’t insulate its clients. Dealerships must still have internal IT best practices, such as:

• Regular backups stored off-site
• Incident response playbooks
• Staff cybersecurity training
• Network segmentation and endpoint protection

Redundancy and Recovery Matter

Those dealerships that had contingency plans—such as local backups of key information and secondary workflows—were able to mitigate the impact better than those who didn’t.

IT is a Strategic Asset, Not Just a Utility

Dealerships must recognize that IT is foundational to every part of the business—from sales to service to F&I—and should be managed with the same discipline as financial operations.

Conclusion

The CDK ransomware attack served as a loud alarm for the automotive retail industry. Dealerships that lacked internal IT policies, cybersecurity protocols, and recovery plans suffered the most. Moving forward, automotive groups must shift from reactive IT management to a proactive, strategic IT posture that protects operations, safeguards customer trust, and ensures long-term resilience.