Automotive Industry Struggles with DMS System Hack

The automotive industry faces a disastrous impact due to the DMS system hacking, leading to potential sales disruption and job loss.

### Impact of CDK Global's DMS Outage on Auto Dealerships and the Future of the Auto Industry
* 😱  The DMS outage is creating **mass chaos in the auto industry**, with dealers unable to operate as the DMS system is **essential for every functionality**.
* 📉  The impact of the outage is likened to being "**worse than Covid when it first hit the dealerships**" as dealers are not functioning.
* 🏎️  The outage is expected to have a **significant impact on sales in the final days of the quarter**, with dealers having to resort to **manual processes to survive**.
* 🖨️  Printing services are suggested as a temporary solution to allow dealers to **hand print contracts and repair orders**.
* 💼  Moving towards a **direct-to-consumer model like Tesla's** is discussed, but concerns are raised about the impact on the **communities and jobs supported by local dealerships**.
* 🚗  There are different types of customers, and some prefer the traditional dealership model where they can **test drive vehicles and interact with the community**.
* 🏢 " I really do believe in that community atmosphere where we come in, we get to know each other. We get to actually service our vehicles. We get to know the people within the organization that **support those communities**.

I think what our editor, Craig Trudel, set out is that the timing of this hack is bad because the industry is under so much pressure. What are you hearing from clients, customers, and those you work alongside? Absolutely. It's just mass chaos at this point. I've been in the auto industry since 1989 and also in retail automotive. In all of those years, I've never seen a DMS operating system down. The dealer requires to actually run a DMS for sales service parts for every single functionality, even stocking in a vehicle. You can't do without the DMS system. So it is a disaster. I feel like it's even worse than Covid when it first hit the dealerships because you're not functioning at this point. So what you just said really jumps out at me worse than COVID, the impact, because I remember covering that. That was my beat. March 2020, working for Craig, who is my editor.

Let me ask you this. If you were advising CDK and telling them what to do to manage this fallout, what would you suggest? I think it's printing services at this point. I know that sounds so crazy, but at this point nobody can actually just have a DMS pop up overnight. So there's only two other DMS providers that are really known in the automotive industry, and it's Tachyon and Reynolds and Reynolds. So there is no way that either one of those companies could start, you know, uploading any type of DMS system for any dealers that are down. But printing services is what basically anybody can do right now. Right. Which is loading up the printing services to allow dealers to be able to hand print contracts as well as all the art roads repair orders that need to happen right now. So we're going back to the ancient stages right now where this is what we need to do is print.

We joked to Craig about the use of
pen and paper, something we will do a lot less in this day and age.
There's a serious side of it, though, right, which is the consumer and the
consumer psychology. You have very high interest rates.
Buying a vehicle or even leasing a vehicle is your biggest financial
consideration after your home. Normally, and we have, what, nine days
left of June. Do you think this is going to have a
really big impact on sales in the sprint to the finish of the quarter?
It's absolutely going to. And I think the only way that a lot of
these dealers can actually survive right now is if they have friends of theirs
that already have a rentals or technician system where they could tell
them what the deal structure needs to be so they could actually put something
together, at least fax it to them, email it to them.
And then you're going to have to handwrite every single contract at this
point.

Right.
But the only way, and I think dealers that are super innovative, they called
me, and they said, I'm limping right now. Limping.
I mean, this is some of the biggest dealerships in the country that sell
1500 units a month. Their service departments are limping at
this point, but obviously they're like fighters.
And I love that about dealers because in many ways, think of all the employees
that basically are also under fire. But if the auto business goes down, and
this is why I really fight for dealerships out there all the way
across, it's all the Americans that would also be out of jobs. If we always
go direct to consumer plans and discuss modernizing the dealership model.
Right. I just leased the Model Y a couple of
months ago. I did it through the Tesla app.
My credit was approved through the Tesla app.
I took the wing mirror off after two weeks.
It was fixed through the Tesla app.

Is that something that the industry needs to move toward? I am not actually a fan of the Tesla model in the sense that basically I understand this is a direct-to-consumer model that makes it easier for customers to buy a vehicle. But on the other hand, I think that the traditional automakers have to improve the customer process. But within it, there's so many people that actually support the automotive market. Think of all of the families in the communities, as well as the little leagues and all of the different types of charities within every community that get supported by a local dealer. All of that goes down if basically we all decide, Hey, we want a direct-to-consumer model, what happens to the Americans that would be out of jobs right now if everything went straight direct-to-consumer? And for me, I really do believe in that community atmosphere where we come in, we get to know each other. We get to actually service our vehicles.

We get to know the people within the organization that support those communities.
So, I think there's different types of people out there that purchase vehicles,
but there's many types of customers out there.
They must test drive the vehicle, look at the vehicle, know the color, and the
exact model that they want before they actually make a purchase.
And those are not ideal for customers that are direct to consumers.

Car Dealer Chaos Arises From Cyberattack on $1.2T Market

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The Impact of a DMS System Hack on the Auto Industry

The hack has caused mass chaos in the auto industry, with the DMS operating system down, impacting sales, service, and parts functionality.

The situation is considered even worse than the initial impact of Covid-19 on dealerships, as the DMS is essential for every single operation.

The suggestion is to resort to printing services for creating contracts and repair orders, as it's currently impossible to quickly establish a new DMS system.

The Impact of Modern Consumer Behavior on Vehicle Sales

High interest rates in vehicle purchasing and leasing are expected to have a significant impact on sales at the end of the quarter.

Dealerships are struggling to survive, with the need for innovative solutions and a shift towards modernizing the dealership model.

The direct-to-consumer approach, as exemplified by Tesla's app-based system, is changing the traditional vehicle purchasing experience.

The Debate Over the Tesla Model and the Traditional Automotive Industry

The Tesla model offers a direct-to-consumer approach, simplifying the vehicle purchase process, but it raises concerns about the impact on traditional automakers and local communities.

Shifting towards a direct-to-consumer model could potentially disrupt the jobs of many Americans and the support for local communities and charities.

There is a strong belief in the community atmosphere and personal interaction provided by traditional dealers, which is a key concern in the debate over the automotive sales model.

Understanding Customer Diversity in Vehicle Purchases

Different types of people purchase vehicles, and there is a diverse customer base in the market.

Customers typically engage in test drives, vehicle inspection, and selection of specific details before making a purchase, which may not be ideal for direct-to-consumer sales.