June U.S. auto sales could take ‘significant' hit from CDK outage

The cyberattacks on CDK Global and the resulting turmoil at dealerships around the U.S. could reduce June new-vehicle sales by about 100,000, according to one forecast.

J.D. Power and GlobalData estimate that U.S. light-vehicle sales for the month will fall by 2.6 to 7.2 percent from a year earlier, for volume of 1.27 million to 1.33 million. They originally had expected sales of 1.41 million before the ransomware event that began June 19 created a "significant" disruption.

The industry's seasonally adjusted annual rate of sales is expected to land between 14.7 million and 15.4 million vehicles, down from 16.2 million in June 2023.

While J.D. Power and GlobalData said a range of outcomes are possible because of uncertainty about how soon the problem will be resolved, they noted that any effect on deliveries could be made up quickly in July. CDK said it didn't expect a resolution before June 30.

"Sales will be delayed, but the majority will likely occur in July shortly after the situation is rectified and sales are being made despite system outages," Thomas King, president of the data and analytics division at J.D. Power, said in a statement. "Indeed, if there is one thing that the pandemic demonstrated to the auto industry, it's that dealers are very adept at dealing with adversity and have been effective in rapidly identifying ways to deliver vehicles to buyers."

Other forecasting firms don't expect CDK's issues to hamper sales as much.

S&P Global Mobility estimates that June sales will grow 1 percent to 1.4 million vehicles, while Cox Automotive expects a 0.4 percent increase to 1.39 million. Cox projected a SAAR of 16 million vehicles, while S&P sees the rate rising to 16.2 million, which would be among the highest for any month since May 2021. Edmunds expected a June SAAR of 15.6 million.

"June auto sales are expected to sustain the recent progress in the market," Chris Hopson, principal analyst at S&P Global Mobility, said in a statement. "Supported by growing incentive and inventory levels, the monthly sales pace will have advanced every month in the second quarter."

The Cox and J.D. Power/GlobalData forecasts show new-vehicle sales up 0.4 to 2.9 percent in the first half from year-earlier levels.

Cox expects Toyota, Honda, Volkswagen and Mazda to have the largest first-half sales increases. It predicts General Motors will remain the top-selling automaker despite a 0.1 percent decline in the first six months of 2024, with Toyota, Ford, Hyundai and Honda rounding out the top five.

The forecasters said the second half of 2024 remains somewhat uncertain but that they have not changed their full-year guidance. Cox expects 15.7 million sales for the year, while S&P expects 16 million.

"Mixed signals regarding the outlook for the second half of the year remain entrenched though, as new-vehicle affordability concerns remain prevalent, and inventories are not expected to advance as strongly as they have done over the past 12 months," Hopson said.

Cox believes expected pricing declines coupled with uncertainty about interest rates could compel some buyers to delay potential purchases. So could the CDK cyberattacks.

"The CDK disruptions just basically add to the general hesitancy," Jonathan Smoke, chief economist for Cox Automotive, said on a media call. "Because now consumers believe it would be inconvenient to try to buy right now, and I think that just makes it even more challenging for the industry to convince consumers that now is a good time to buy. I think that's really the challenge the industry faces this summer."