In light of the ongoing CDK Global outage, we sat down with Erin Kerrigan, founder and managing director of Kerrigan Advisors, to discuss the ramifications of this disruption for car dealerships nationwide. Kerrigan, whose company advises hundreds of dealers primarily on buy-sell transactions, shared her initial reactions, industry concerns, and the potential long-term impacts on the market.
Takeaways
- Kerrigan emphasized the integral role of Dealer Management Systems (DMS) in facilitating buy-sell transactions. With CDK’s outage, the complexity and dependency on DMS become apparent, highlighting the operational difficulties faced when these systems go down. She shared, “In a buy-sell, you have lots of moving pieces and parts, and you’re trying to tabulate all the numbers; you rely on the DMS on every level.”
- The disruption has spotlighted the risks associated with CDK and Reynolds’s dominance in the DMS market. Kerrigan noted that the incident underscores the need for more competition in the industry to mitigate such risks. She pointed out, “It shines a bright light on the risk factor of having a duopoly… most industries have a little more competition.”
- Kerrigan discussed the potential long-term damage to CDK’s reputation, exacerbated by prior complaints about service quality following its acquisition by a private equity firm. This incident could accelerate the shift of some dealers towards alternative DMS providers like Reynolds. She observed, “I have heard complaints from dealers about CDK… I don’t think this is really good for CDK.”
Check out our full coverage of the CDK cyberattack here.
"I think that we have bad actors coming from states that are not friendly to our country, that have created an industry in effectively hacking U.S. businesses with these terrorist-like attacks on our data." – Erin Kerrigan
