The CDK systems shutdown may be a motivating event for more dealers to switch to e-contracting.
As scores of dealerships operate without the software they’ve grown to rely on to do business every day after CDK Global shut down its dealer software systems, many are seeking answers about how to compensate now and when future disruptions happen.
The shutdown followed two cyberattacks CDK experienced on Wednesday. It shut down most of its systems after the first attack, then restored its dealer management system and digital retailing services the same day, only to shut down everything again late Wednesday after a second cyberattack.
On Friday, the company said it and a third party were still assessing the situation but remained “vigilant in our efforts to reinstate our services and get our dealers back to business as usual as quickly as possible.”
CDK didn’t say how many dealerships the outage affected, but its website says it serves nearly 15,000 stores.
As dealers scramble to process the heavy flow of “paperwork” necessary to sell cars and products, many are reaching out to advisers and providers for help.
Compliance expert Gil Van Over, president of Mosaic Audit Services, said he’s fielded calls from at least 15 of the auto groups the firm serves.
Dealerships that don’t have backup systems have been using now-antiquated methods to get business done, he said. After all, they can’t forego regulatory compliance, especially.
“The biggest issue I’m hearing from dealers is that they’re having to handwrite contracts, hoping finance sources will accept them. They’re more prone to mistakes. It takes longer. There may be a significant amount of recontracting that will take place after CDK’s back up and running.”
Many, though, have backup solutions for negotiating deals, spotting consumer ID red flags, and processing contracts, he pointed out. Electronic contracting tools are available from companies that include RouteOne, DealerTrack and J.D. Power subsidiary Darwin Automotive. Such software allows businesses to complete contract paperwork electronically, including obtaining customers’ signatures.
“At some point, they’re going to have to come back and put all those deals back into CDK if they’re relying on scanned deals,” Van Over said, but it’s a time- and money-saving backup solution that can also help dealers avoid mistakes common to paper-based processes.
In fact, the CDK shutdown may be a motivating event for dealers to switch to e-contracting and enjoy its benefits, which Van Over said ironically include greater document security.
“Digital records tend to be a little safer. You’ve got to be a sophisticated identity thief to break in (to systems). But you could be a janitor and take stuff out of people’s desk.”
Some dealers have resisted the method, he said, but it also allows them to get payments from financing sources faster for better cashflow.
“I’m trying to lead them down the digital retailing path,” Van Over said. “When we look at deals, we always focus on the paper trail. … Your compliance obligations did not go away just because your vendor system is not operable.”
Regardless of whether they embrace e-contracting, dealers can’t operate today without a DMS, he said.
“The DMS creates the customer record, and service, sales, F&I, anybody with authorization, can access that customer record. You don’t have to ask the customer 20 times, ‘What’s your street address?’”
Service drives at dealers that rely on CDK’s DMS, though, are still largely stuck with handwriting repair orders during the shutdown, he said, unless they download a blank form to the PDF format to type in order information for a more professional look that can then be integrated into the DMS when it’s back up.
Meanwhile, dealers should avoid sharing with customers that their systems are down due to a cyberattack, since that would cause concern about their personal data being compromised.
“Don’t lie to a consumer, but just say the system’s down.”
Despite the significant inconvenience, “Dealers are resilient. They’re very adaptive,” Van Over said, “and they’re finding solutions and workarounds because they still have vehicles and products to sell. It may just be a while till it gets to their files.”
