U.S. Dealers Hit By Cyberattack That Could Impact Sales For ‘Several Days’

Good morning! It’s Friday, June 21, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

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1st Gear: Cyberattack Continues To Disrupt U.S. Car Sales

I know it’s tricky, but this week we have to spare a thought for America’s car dealerships as while they were all busy applying sky-high markups to the cars they sell, they were the victim of a massive cyberattack. The hit affected the CDK Global computer services provider and has left dealerships across the U.S. and Canada struggling with its fallout for the past two days.

The attack hit CDK Global on Wednesday June 19 and restricted dealers across the country to using pen and paper for all their admin, reports the Wall Street Journal. The attack has restricted many dealers’ ability to sell and repair cars for customers across America:

“We remain vigilant in our efforts to reinstate our services and get our dealers back to business as usual as quickly as possible,” a spokeswoman for CDK said. The company provides nearly 15,000 dealers software to manage their sales, payroll and general office operations, according to the company’s website.

Meanwhile, dealers were left to address the fallout, in some cases using pen and paper to record sales.

Dealers “are actively seeking information from CDK to determine the nature and scope of the cyber incident so they can respond appropriately,” said Mike Stanton, chief executive of the National Automobile Dealers Association, in a written statement.

Now, it appears as though there may be no quick fix for the issues plaguing America’s dealerships. The issue’s they’re now facing as a result of the computer outage are expected to last “for several days” while CDK gets to the bottom of the issue, reports Automotive News.

As the systems provider rushes to find a fix that addresses the attack, questions have now been raised over security at the computer provider:

“Cyber incidents are a constant threat, and one we take extremely seriously,” said Nikhil Kalani, chief information security officer at Reynolds and Reynolds. “Cybersecurity has been a very high priority for our company for many years, as demonstrated by our acquisition of Proton Dealership IT, the industry’s leading cybersecurity services provider, and the construction of our state-of-the-art Security Operations Center.

“The reported events this week reinforce the need to keep cybersecurity a major focus throughout our entire industry.”

The issues at dealers are expected to continue into today, with automakers encouraging customers to remain patient with dealerships while they struggle through the problems.

2nd Gear: Ford Will Take A Profit Hit To Sort Quality Issues

While sales falter as a result of the systems outage across America’s dealerships, Ford has said that it may be facing another hit on its profits, but this time it’s self-inflicted. The Mustang maker has dominated headlines in recent years for the sheer number of recalls its been forced to issue on its models, and now the Blue Oval says it will take a hit on its profits in order to finally address the issue.

In an interview with Bloomberg, company boss Jim Farley said he was “so fed up” with the constant recalls his company is facing that he’s willing to lose money to fix the issues:

For the foreseeable future, Farley says, the company will hold newly redesigned models for up to six weeks to perform extra quality checks that go beyond the extensive tests Ford undertakes in its factories.

Over time, the automaker hopes to reduce warranty reserves that have more than doubled in five years. In the short term, however, it means Ford will take a revenue hit by not immediately shipping models to dealers.

“Our earnings may be a little lumpy,” Farley told analysts on Ford’s first quarter earnings call in April. “What we’re going to see long term is fewer recalls and lower warranty costs because of this new process.”

This year alone, Ford has faced recalls and stop-sale orders for its F-150 Lightning electric pickup truck, the Bronco Sport SUV and the Maverick pickup truck. This year’s recalls follow a three year period in which the automaker was the most recalled car maker in America.

3rd Gear: Airbag issues Force Toyota Stop Sale Order

On the subject of quality control, Toyota has been forced to issue a stop-sale order on two of its models this week. The Japanese automaker halted deliveries of the Toyota Grand Highlander and the Lexus TX over issues it’s found with the two cars’ side airbags.

The order is accompanied by a recall of the two three-row SUVs, which affected around 145,000 cars sold across the U.S., reports Automotive News. Now, the Japanese automaker has issued a stop-sale order for the cars while it investigates issues with the driver’s side curtain shield airbag:

Toyota announced the recall and stop-sale June 20 and said it will inform customers with a campaign by mid-August. It does not yet have a remedy for the issue and has temporarily halted production of the crossovers “until a remedy can be determined.”

Both crossovers are in their initial model year and are built at Toyota’s assembly plant in Princeton, Ind. Through May, Toyota has sold 48,840 Grand Highlanders and 18,965 TXs in the U.S.

If you have a Lexus or Toyota that you think has been impacted by the recall, there are a few simple things you can do to check. First, NHTSA has a handy app you can use to check if your vehicle is affected, or you can head to the regulator’s website and plug your VIN into its recall search tool.

4th Gear: American Airlines Attendants Are Preparing To Strike

And now, for something completely different as it’s time to check in with American Airlines. The American carrier is currently caught up in contract negotiations with its flight attendants and things don’t look to be going well.

This week, negotiators have failed to reach a deal on a new contract for attendants, paving the way for strike action at American, reports Reuters. The union representing flight attendants at the airline has been stuck in negotiations for weeks, but talks broke down on Thursday:

A union representing flight attendants for American Airlines Group said on Thursday that the latest round of talks with the carrier did not lead to an agreement this week.

The Association of Professional Flight Attendants, which represents about 28,000 American Airlines flight attendants, said it has moved closer to a strike as the airline did not present a favorable agreement.

The airline’s flight attendants, however, cannot walk off the job until the National Mediation Board grants them permission.

Before strike action can be approved, the Mediation Board will have to determine whether an impasse has been reached or not. If further negotiations cannot reach a conclusion, then action could begin ramping up. However, American has said that it remains committed to negotiating with the union.