The Automotive Troublemaker: CDK Costs Dealers Big

Today, we’re talking about a new report that shows the CDK hack resulted in $1B in losses, how GM is pulling back from its EV target and what other retailers are doing to take advantage of Amazon Prime Day

Dealerships across the nation are reeling after a devastating cyberattack on CDK Global resulted in $1.02 billion in losses, as reported by the Anderson Economic Group (AEG).

• Between June 19 and July 15, dealerships lost 56,200 new-vehicle sales.

• AEG initially projected a $944 million loss but updated it to $1.02 billion due to new sales data and the actual duration of the outage.

• AutoNation estimated the CDK situation had stripped $1.50 out of its second-quarter earnings per share.

• On June 21 more than $25 million of bitcoin was sent to an "address assessed by TRM Labs to be controlled by the ransomware group BlackSuit," according to blockchain intelligence firm TRM Labs.

• AEG CEO Patrick Anderson highlighted the need for businesses to brace for potential cyberattacks, stating, “This episode is a wake-up call for the auto industry, and a warning to all others.”

General Motors CEO Mary Barra has adjusted the company’s ambitious EV production target, signaling a shift in expectations amid slowing momentum for electric vehicles.

• GM will not reach the production capacity for one million EVs by the end of next year, as previously aimed.

• Barra emphasized that customer demand will dictate the pace of reaching the one million EV annual sales mark.

• The company faces hurdles, including recent battery production issues and delayed opening of an electric pickup truck plant near Detroit.

• GM is increasing production of the electric Chevrolet Blazer and Equinox models to boost sales.

• US EV deliveries were flat in Q2 year-over-year but increased 11% from Q1, per Cox Automotive.

• Despite the slowdown, Barra remains confident the market will eventually support their EV goals, stating, “We won’t get to a million just because the market’s not developing, but it will get there.”

As Amazon gears up for its 10th Prime Day, rival retailers are not sitting idly by. Major players like Walmart, Target, Kohl’s, and newcomers TikTok Shop and Temu have launched their own summer sales to attract deal-hungry shoppers.

• Retailers are leveraging the excitement around Prime Day to offer their own discounts and promotions, aiming to capture some of Amazon's market share.

• July sales events help retailers pull in back-to-school shoppers and those looking for summer items, mitigating the traditional summer lull in retail spending.

• Retailers closely monitor each other's pricing, with some, like Best Buy, adjusting their deals in real-time to stay competitive with Amazon.

• Perceived deals and the urgency created by limited-time offers can drive significant consumer interest and spending.

• Kirthi Kalyanam, a business professor, notes, “Retailers hype up their promotions to pull people in, but not all deals are as competitive as they seem.”

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