CDK Hack Costs Dealers $1B, GM To Miss EV Target, Prime Day Hype

It’s Tuesday. That is all. Today, we’re talking about a new report that shows the CDK hack resulted in $1B in losses, how GM is pulling back from its EV target and what other retailers are doing to take advantage of Amazon Prime Day

Show Notes with links

• Dealerships across the nation are reeling after a devastating cyberattack on CDK Global resulted in $1.02 billion in losses, as reported by the Anderson Economic Group (AEG).
  • Between June 19 and July 15, dealerships lost 56,200 new-vehicle sales.
  • AEG initially projected a $944 million loss but updated it to $1.02 billion due to new sales data and the actual duration of the outage.
  • AutoNation estimated the CDK situation had stripped $1.50 out of its second-quarter earnings per share.
  • On June 21 more than $25 million of bitcoin was sent to an "address assessed by TRM Labs to be controlled by the ransomware group BlackSuit," according to blockchain intelligence firm TRM Labs.
  • AEG CEO Patrick Anderson highlighted the need for businesses to brace for potential cyberattacks, stating, “This episode is a wake-up call for the auto industry, and a warning to all others.”

• General Motors CEO Mary Barra has adjusted the company’s ambitious EV production target, signaling a shift in expectations amid slowing momentum for electric vehicles.
  • GM will not reach the production capacity for one million EVs by the end of next year, as previously aimed.
  • Barra emphasized that customer demand will dictate the pace of reaching the one million EV annual sales mark.
  • The company faces hurdles, including recent battery production issues and delayed opening of an electric pickup truck plant near Detroit.
  • GM is increasing production of the electric Chevrolet Blazer and Equinox models to boost sales.
  • US EV deliveries were flat in Q2 year-over-year but increased 11% from Q1, per Cox Automotive.
  • Despite the slowdown, Barra remains confident the market will eventually support their EV goals, stating, “We won’t get to a million just because the market’s not developing, but it will get there.”
  • 
    
• As Amazon gears up for its 10th Prime Day, rival retailers are not sitting idly by. Major players like Walmart, Target, Kohl’s, and newcomers TikTok Shop and Temu have launched their own summer sales to attract deal-hungry shoppers.
  • Retailers are leveraging the excitement around Prime Day to offer their own discounts and promotions, aiming to capture some of Amazon's market share.
  • July sales events help retailers pull in back-to-school shoppers and those looking for summer items, mitigating the traditional summer lull in retail spending.
  • Retailers closely monitor each other's pricing, with some, like Best Buy, adjusting their deals in real-time to stay competitive with Amazon.
  • Perceived deals and the urgency created by limited-time offers can drive significant consumer interest and spending.

Hosts: Paul J Daly and Kyle Mountsier

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Transcript

Kyle Mountsier: 0:10

Good morning. I've got different co hosts. I got Jordan Carson Nice to meet Paul Daly's kind of run through an airport. We're talking about CBK hacks, GM and prime.

Jordan Cox: 0:25

The people really want to There we go. Kyle. So good to see you today.

Kyle Mountsier: 0:29

Jordan, we've had quite a morning.

Unknown: 0:33

You say so,

Kyle Mountsier: 0:35

man, I am. Just Just so everybody knows right now. I'm listening to my own audio. About a second after set. So if I speak weird, that's why

Jordan Cox: 0:49

that's something special right there.

Kyle Mountsier: 0:53

Man, so Paul and I are traveling and it has been quite a morning because we are trying to get Paul on, but he's in an airport. That's not working so well. So we got Jordan, he's pinch it coming in hot. So we'll be able to handle this really quickly. Jordan, how're you doing this morning, man? Man,

Jordan Cox: 1:13

I am great. It's a beautiful day here in Northern Indiana. I'm more interested in how the weather and how things went yesterday and beaver Toyota.

Kyle Mountsier: 1:21

Dude, yesterday. We're I'm excited. We shot a whole video. But we are at the beaver charity golf tournament. And we know dealers all over the country are doing charity golf tournaments. It's a great way to engage the community. Excellent. Have your employees volunteer. But whether we just beautiful golf was amazing. raised over$120,000 for three charities total. So they each got $40,000 plus. And it was really cool to see people to come together and celebrate, have fun, but also do something cool for the community. And it just shows the heart of beaver. And then I'm here this morning, actually. So that's that's beaver Toyota. We got some construction going on this morning. It's a whole thing.

Jordan Cox: 2:07

Not a fake background. That's real.

Kyle Mountsier: 2:09

Not that is fully real. Apple enhanced. There'll be do so. Man. We have a really cool new Auto Collabs episode out on all of our platforms right now. It is blending storytelling and AI feedback to create the ultimate training experience with Abby Vetter, and Kathy Munoz. We got to spend some time with them. There was Ford university doing some really cool stuff on how Ford and Lincoln dealers are going to be able to engage in training. So excited about that. You want to check that out and keep an eye on our socials because we are traveling, and you're going to check out what we're doing at dealers or conferences all over the country. I think that's the updates for us this morning, Jordan, we should get into it.

Jordan Cox: 2:57

Let's get to it. All right.

Kyle Mountsier: 3:00

So more info coming out daily. But dealerships across the nation are reeling after a devastating cyber attack on CD clay global, and it is now stating that there have been over $1.02 billion in losses, as reported by the Anderson economic group between June 19 And July 15. dealerships have lost 56,000 new vehicle sales. Ag initially projected a$944 million loss, but just updated it to just over a billion due to some new sales data. AutoNation estimated the CDK situation had stripped $1.50 out of its second quarter earnings per share. And then on June 21, more than 25 million a Bitcoin was sent to an address as assessed by TRM labs to be controlled by the ransomware group, black suit. So looks like that may be the transaction for the ransom. Ag CEO Patrick Anderson highlighted the need for businesses to brace for potential cyber tax, stating this episode is a wake up call for the auto industry and a warning to all others. So money flying everywhere, Jordan,

Jordan Cox: 4:18

money everywhere. Can you imagine that they paid in Bitcoin? Are you surprised? 25 million, which is much larger than what was initially projected. I mean, you heard 10 million you heard 15 million, someone even said 20 But now it's basically been proven it was 25 million. How crazy?

Kyle Mountsier: 4:37

I can't I can't believe that it was Bitcoin, like, yeah, leave it to a bunch of hackers to use Bitcoin, which is blockchain in a world right? Like, what a what a wild thing. still yet to be determined what CDK is going to do for the amount of losses. There's been some statements coming out that they definitely will be reimbursing dealers or helping them with billing, but nothing concrete yet. But man 1.1 point 2 billion across the industry over just a month period. Quite a massive hit to the overall revenue and profitability of dealerships across the country. Luckily spread pretty evenly hopefully. So

Jordan Cox: 5:23

yeah. And Kyle even like the disparaging difference between what he found was the loss so 1 billion compared to what the hackers actually got, which was 25 million. Man, those shoes are pretty different.

Kyle Mountsier: 5:35

Yeah, that's a what a thing like you got 25 million but you impacted the industry by a billion dollars. Exactly.

Jordan Cox: 5:45

He destroyed the industry for $1 billion. Wow. Brutal. Yeah.

Kyle Mountsier: 5:50

Keep it moving. General Motors CEO Mary Barra has adjusted the company's ambitious EB production target. sickeningly a shift in expection expectations amid slowing momentum for electric vehicles. She said that they will not reach the production capacity for 1 million EVs, recent battery production issues and delayed opening of an electric pickup truck plant near Detroit. However, they are increasing production of The Electric Chevy Blazer and Equinox models to boost some sales USCB deliveries were flat in q2 year over year but increased 11% from q1 per Cox automotive bar remains confident the market will eventually support their Eevee goal stating we won't get to a million just because the markets not developing but it will get there. So still progress, but not as fast as they originally had hoped.

Jordan Cox: 6:48

Yeah, even in this morning in our in our morning email, which if you don't get that, go to his sotu.com and subscribe to our daily digest. They actually covered a little bit more on some changes for the Silverado. Evie. So there there are going to change that a little bit pricing wise trim level wise, it's really interesting to see borrowers response to that she knows there's a high demand for the right vehicles. But whether it's an Eevee, whether it's an Ice Vehicle, it's got to meet consumer needs. It seems like with the Silverado, at least they're able to get the mileage range. They're looking for towing capacity, things like that. But I mean, consumers are really the ones to decide that if it really meets their needs or not. I mean, we're just gonna see where Barra continues to take things, especially with the excuses about battery production issues or delays in opening. I just think it's a consumer thing. What's your take, Kyle?

Kyle Mountsier: 7:41

Yeah, I'm just glad that they're kind of paying attention to the market at this point, right. Yeah, that's right. It seemed like for a long time that manufacturers were just taking a political stance or taking a pursuit of some some dream that the consumer wasn't ready for. And now we're seeing Ford and GM and other manufacturers start to take a real, more a much more critical look to their production timelines, and really resting on what consumer demand is actually asking for in the market probably listen to dealers on what dealers are actually wanting, and listen to consumers from on what they want from a retail sense,

Jordan Cox: 8:16

ya know, for sure, that's exactly right. Look to the consumer, that will dictate where the markets gonna go.

Kyle Mountsier: 8:22

Well, speaking of consumers,

Unknown: 8:25

that was a good one.

Kyle Mountsier: 8:30

So as Amazon gears up for its 10th Prime Day, which I think they have, like 10 a year, rival retailers are not settling. sitting idly by major players like Walmart, Target, Kohl's, and newcomers ticked up shop and T mu have launched their own summer sales to attract deal hungry shoppers, retailers or retailers are leveraging the excitement around Prime Day to offer their own discounts and promotions, aiming to capture some of Amazon's market share. July sales events have helped retailers pull back in back to school shoppers and those looking for summer items. They are all kind of closely monitoring each other's pricing with some like Best Buy adjusting their deals in real time to stay competitive with Amazon perceived deals and the urgency created by limited time offers can drive significant consumer interest in spending currency Cala cow the nm business professor notes retailers hype up their promotions to put pull people in but not all deals are competitive as competitive as they seem. Looks like the summer is going to be busy for those for those drop sales.

Jordan Cox: 9:35

I'm wondering how many packages are going to show up at my doorstep over the next few days based off what my wife buys.

Kyle Mountsier: 9:43

This is a genius move actually because when I think about it, like the way that I shop now, perceptively is Amazon as a starting place a lot of times for me but it's not always the ending place of where I shop. Maybe it drives some interest or allows me to kind of like go deeper in funnel but sometimes when I'm looking for it to Technology item or I'm looking for a consumer household Good. I'll go to something that's a little bit more familiar easy to grab, maybe it's a thing that I actually want to pick up or go to in store. So for these retailers to be going, Oh, Amazon is pricing, they're incentivizing purchase behavior. And now, I'm going to kind of like draft on that is a genius move. And I think that as as the auto industry about these, these times when different retailers are creating incentives to draft on those incentives, we see that around the holidays, you know, particularly in particular when people are driving toward particular sales. But when you think about just like drafting on retail energy, it's something that I think as the auto industry we should be doing.

Jordan Cox: 10:46

Yeah, that's right. With like traditional shopping, I always think that there was some sort of loss leader that would get people into the store. So think like, Best Buy around Black Friday, they'd have TVs that were marked down to get you in store. So you'd buy other products. Here with Amazon, it's really about incentivizing those people directly to one product, which reminds me a lot of how retail automotive works. It's not like you can have a loss leader on a on one sedan just to get someone in the door to buy a truck like it doesn't work that way. So it'll be really interesting to see the the buying habits and the consumer dynamics that develop just based off of these simple principles of changing pricing, and then increasing that demand and really creating that demand as a whole. For those products, which as we know, retail automotive marketers out there. Sometimes they're the best at driving that demand for their stores. It's interesting. Absolutely.

Kyle Mountsier: 11:38

Well, hey, take a little draft from someone else in pricing today, but that's all we got time for. Hey, Jordan, thanks for being here with us. Oh, thank you. We have had a ton of fun. I'm gonna get to work on the ground in the dealership hanging out. You're gonna go serve someone. Have a great day.