Week 2 of CDK outage changes dealers' way of doing business

As dealership management system provider CDK Global's outage continues into Week 2, dealers have been forced to make significant changes in the way they operate. CDK's customers nationwide, who learned June 26 that a small test group of dealerships were brought back online by the company, have turned to other methods to sell and service vehicles.

Todd Szott, dealer partner at Szott Auto Group near Detroit and president of the Detroit Auto Dealers Association, said his Szott M-59 Toyota store in Waterford, Mich., was fairly busy June 24.

"We did sell quite a few cars last week and I think we also were able to fine-tune our alternative processes on Friday," Szott said. "So we were kind of ready to hit the ground running. I'm optimistic we can deal with this for a few more days."

Szott Auto's Chrysler-Dodge-Jeep-Ram and Toyota dealerships use a product by Canadian company Dealer-FX to schedule new service appointments. Dealer-FX, branded SmartPath at the Toyota store, is up and running except for some integration it normally has with CDK, Szott said, which means those stores "can't be quite as efficient."

Szott Ford, which uses CDK for service scheduling, is now using an alternate system called Singlethread. The system helps his dealership keep in contact with customers without CDK, he said.

The CDK shutdown is "a big inconvenience to us, and we're trying not to make it an inconvenience to the customer at all," Szott said. "I think there's a lot of customers coming in and they're getting taken care of and they're not even noticing what's going on in the backside."

Szott said the extra work for his staff will come in when CDK is back up and his store will have a lot of data entry to handle.

In the meantime, Szott said his dealership is using "the old-fashioned phone" to schedule service appointments.

"We still do business that way," he said.

Dealers' access to the State of Michigan's RD-108 car registration application required for any new- or used-car sale also is not fully operational because of the CDK shutdown, Szott said, noting the Secretary of State the first week of the shutdown reached out to him with a reminder on how to complete an online version of that form and print it for customers to sign.

Damon Lester, owner of Nissan of Bowie, in Maryland, said the CDK crisis is costing his store "a significant reduction in income."

Customer pay service transactions are moving along as usual, but no data can be submitted to warranty companies because is housed within CDK, he said.

"We're limited to being able to submit warranty claims and being reimbursed," Lester said.

"If you come in to get your oil changed and you're just paying cash or a credit card, that transaction works out," he said. "But when we have to submit information to a warranty company on behalf of the customer based on a claim, then that's where things have been slowed down if you have a maintenance agreement."

Lester said his store's sales also are affected.

"The contracting of a sale has definitely slowed down because that transaction was once digital and contracted via an e-contract, which we can still do, but the paperwork that's required to get everything in and submitted so a sale won't bounce back from the bank is where we're seeing some slowdown," he said.

Lester, vice chair of the National Association of Minority Automobile Dealers, said it's essential CDK reps check in with dealer customers regularly throughout this crisis. He becomes NAMAD chairman in August.

"It's no different than how we treat our customers who buy a car or service a car through us," Lester said. "We have that follow-through. It's hard on everyone, but from a customer service standpoint, sometimes that check-in might go a long way."

Greg Freeman, general manager at Lilliston Ford-Chrysler-Dodge-Jeep-Ram, in Vineland, N.J., said his staff is thinking creatively and working around the CDK shutdown. The dealership uses CDK only for DMS.

"It's not a business interruption; it's more of a business nuisance," he said. "It's harder to know what the grosses are because we don't have CDK to tell us, but we are still trying to keep track."

Freeman uses VinSolutions' customer relationship management systems to keep track of inventory, along with iPacket, Darwin, RouteOne and forms from Dynatron Software to supplement their business operations.

Freeman said they have been making average to above-average sales since the CDK shutdown and only one in-person customer was aware of the cyberattacks. But without CDK, Freeman said, it is challenging to determine exactly where his business stands and which cars to pay off and trade.

"At the end of the day, we're getting deals, we're contracting everybody that we possibly can," Freeman said. "We're getting funded when we're contracting so as far as a cash flow issue, it hasn't been a huge hindrance."

Freeman pays his sales staff weekly and averaged the last 12 weeks of pay to ensure employees were being paid. When CDK comes back online, he will settle any imbalances with employees, he said.

"We're just keeping the morale good, keeping everybody motivated," Freeman said. However, he added that if the shutdown continues for a month, that would be the tipping point for his dealership.

Bill Brown Ford in Livonia, Mich. — the nation's largest Ford store by volume — alerted customers June 19 that most of its operations were "significantly affected" by the cyberattacks and that it couldn't take new appointments or parts customers until the issue was resolved.

The store said in posts on its website and on Facebook that it was working at a "very limited capacity" and couldn't accept cash payments — only credit or debit card transactions.

"We thank you for your patience and understanding during this challenging time," store officials wrote on its website. "Our goal is to return to normal operations as quickly as possible, and we appreciate your cooperation and support."

Store officials did not respond to phone or email messages seeking further comment.

David Gonzalez, president of Fletcher Jones Automotive Group in Newport Beach, Calif., uses CDK for repair orders. Following the cyberattacks, he originally anticipated a 50 to 60 percent revenue loss. However, with myKaarma providing free assistance software to help process orders, they have only experienced around a 20 percent hit.

"They have saved us from going entirely to pen and paper," Gonzalez said.

Fletcher Jones does not use CDK for sales to avoid relying on a single system, which has helped them "keep a leg up against the competition," he said.

Gonzalez is planning for a monthlong outage and likens the unprecedented CDK shutdown to an early COVID-19 patient.

"They are going to need some pretty strong doctors' notes giving them the OK before they are let back inside the house," he said.

He also has seen the CDK outage galvanize the automotive retail community.

"Although we compete daily, sometimes viciously," Gonzalez said, "we are a pretty tight community when things get tough."

— Georgia Hall and Mike Martinez contributed to this report.