The automotive industry in the United States is currently grappling with significant challenges, including a ransomware attack on CDK Global that occurred on June 18-19, 2024. This cyberattack has severely impacted nearly 15,000 dealerships across the country, leading to a projected decline in new vehicle sales for June compared to the previous year. In response to the attack, CDK Global reportedly paid $25 million in bitcoin to restore operations, highlighting the severity of the situation [d622765a].
As a result of the CDK outage, dealers have been forced to revert to manual paperwork, causing delays in sales. Despite these setbacks, it is anticipated that most sales will occur in July once the systems are fully restored. The total new vehicle sales for June 2024 are expected to range between 1,336,800 and 1,273,600 units, representing a decrease of 2.6% to 7.2% from the previous year. Additionally, transaction prices are trending downwards, with the average price now at $44,857, a drop of $1,372 or 3% from last year [924ad46b].
The impact of the CDK cyberattack extends beyond immediate sales figures; it could also affect the U.S. GDP for the second quarter, as disruptions in sales can lead to inventory shortages and manufacturing slowdowns. However, experts suggest that if CDK can restore its services quickly, the long-term impact on the automotive industry may be minimal [3da91388].
In addition to the cyberattack, the automotive sector is facing other challenges, including a strike by the International Longshoremen's Association (ILA) that began on October 1, 2024, and concluded on October 4, resulting in a 62% salary increase agreement. Furthermore, companies like Recaro Automotive and BBS have filed for bankruptcy, which is affecting the supply of automotive seats and wheels [d622765a].
Consumer preferences are also shifting, with a McKinsey survey indicating that 40% of U.S. electric vehicle (EV) buyers still prefer traditional cars. This trend is reflected in the significant drop in used EV prices from 2023 to 2024. Meanwhile, the average parts per vehicle have increased, with SUVs and trucks averaging 7.3 parts, and passenger cars averaging 6.3 parts, indicating a growing complexity in vehicle manufacturing [d622765a].