Asbury Automotive Group Provides Update on Service Impacts Related to the CDK Cyber Incident

Rhea-AI Summary

Asbury Automotive Group (NYSE: ABG) reported a cyber incident affecting services provided by CDK Global, a vendor for many automotive retailers. The attack, identified on June 19, 2024, impacted Asbury's sales, service, inventory, CRM, and accounting functions. Immediate actions were taken to protect systems, and contingency plans are in place to mitigate operational disruptions. However, operations may be slower than usual. Koons Automotive locations and the Clicklane platform remain largely unaffected. The full scope and potential financial impact of the incident are currently unknown, and ongoing assessments are being conducted with CDK Global.

Positive

• Immediate precautionary measures were taken to protect Asbury's systems.
• Contingency plans are in place to minimize operational disruptions.
• Koons Automotive locations and Clicklane platform experienced minimal interruption.

Negative

• Cyber incident has adversely impacted business operations.
• Potential for slower business functions until systems are fully restored.
• Full scope, nature, and financial impact of the incident are currently unknown.

Insights

Financial Analyst

The unexpected cyber-attack on CDK Global, affecting Asbury Automotive Group's operational functions, raises significant concerns for stakeholders. Given that this situation impacts core areas such as sales, service, inventory, customer relationship management and accounting, the immediate financial implications could be considerable. The Company's proactive measures to protect its systems are prudent, but the potential for ongoing disruptions remains until the systems are fully restored. This could affect short-term revenues, particularly if the slowdown in operations persists.

Furthermore, the Company's inability to gauge whether customer data was compromised introduces an element of uncertainty that could affect investor confidence. While the Koons Automotive locations and Clicklane remain largely unaffected, the broader impact on Asbury's other dealerships and service centers might show in the upcoming quarterly results, potentially affecting stock performance. Investors should monitor subsequent updates for clarity on the financial repercussions and any mitigation strategies the company employs.

In the long term, consistent communication and effective crisis management will be critical. The situation underscores the importance of robust cybersecurity measures in maintaining investor trust and business continuity.

Cybersecurity Expert

This cyber-attack highlights vulnerabilities in third-party vendor relationships, a growing concern across industries. Asbury's reliance on CDK Global's Dealer Management System and Customer Relationship Management system underscores a critical aspect of supply chain security. While Asbury has contingency plans in place, the incident emphasizes the need for rigorous vendor risk assessments and multi-layered cybersecurity strategies.

For investors, it’s important to understand that cyber incidents can lead to both immediate operational impacts and long-term reputational risks. The fact that Koons Automotive locations and Clicklane have minimal interruptions due to their independence from CDK's systems suggests a potential strategy for diversification in vendor reliance. This could be a consideration for Asbury moving forward to mitigate similar risks.

Additionally, the uncertainty regarding customer data access is particularly concerning. Data breaches can lead to substantial regulatory fines and litigation costs, alongside the damage to customer trust. The evolving information around the incident necessitates close observation of further updates from both Asbury and CDK Global to assess the full scope of the impact and the steps being taken to bolster cybersecurity measures.

DULUTH, Ga.--(BUSINESS WIRE)-- Asbury Automotive Group, Inc. (NYSE: ABG) (“we,” “our” or the “Company”), one of the largest automotive retail and service companies in the U.S., learned on Wednesday, June 19, 2024, that one of its vendors (CDK Global) experienced a cyber-attack impacting certain services provided to the Company and many other automotive retailers, including the Company’s sales, service, inventory, customer relationship management, and accounting functions. Upon discovery of the incident, we took immediate precautionary steps to protect our systems.

While information surrounding this event continues to evolve, our stores have contingency plans in place to minimize disruptions to our daily operations. Accordingly, at this time, our ability to sell and service vehicles remains operational, although some elements of our business may function slower than normal. Our Koons Automotive locations in Maryland and Virginia do not utilize CDK’s Dealer Management System or CDK’s Customer Relationship Management system and therefore continue to operate with minimal interruption, as does Clicklane, our online vehicle purchasing platform.

This incident has adversely impacted the Company’s business operations, a circumstance likely to continue until such time as the relevant systems are fully restored. Due to the ongoing nature of the situation, we are presently unable to confirm the full scope, nature and impact of the incident, or whether any customer data was accessed. As a result, the Company has not yet determined whether the incident is reasonably likely to have a material impact on the Company’s financial condition or results of operations.

We remain in contact with CDK Global to assess the situation. Additional updates may be provided as more information becomes available.

About Asbury Automotive Group, Inc.

Asbury Automotive Group, Inc. (NYSE: ABG), a Fortune 500 company headquartered in Duluth, GA, is one of the largest automotive retailers in the U.S. In late 2020, Asbury embarked on a multi-year plan to increase revenue and profitability strategically through organic operations, acquisitive growth and innovative technologies, with its guest-centric approach as Asbury’s constant North Star. As of March 31, 2024, Asbury operated 157 new vehicle dealerships, consisting of 206 franchises, representing 31 domestic and foreign brands of vehicles. Asbury also operates Total Care Auto, Powered by Landcar, a leading provider of service contracts and other vehicle protection products, and 37 collision repair centers. Asbury offers an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes vehicle repair and maintenance services, replacement parts and collision repair services; and finance and insurance products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection debt cancellation, and prepaid maintenance. Asbury ranks 18th in the 2023 Forbes list of America’s Best Mid-Sized Companies. Asbury is recognized as one of America’s Greatest Workplaces 2023 by Newsweek as well as one of the Best Companies to Work For in the Retailers industry by U.S. News & World Report.

For additional information, visit www.asburyauto.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans, objectives and the potential impacts of the cyber incident at CDK. These statements are based on management's current expectations and beliefs and involve significant risks and uncertainties that may cause results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, any inadequacy, business or operational interruption, integration failure, or information security failure as a result of the cyber incident at CDK; our inability to realize the benefits expected from recently completed transactions; our inability to promptly and effectively integrate completed transactions and the diversion of management’s attention from ongoing business and regular business responsibilities; our inability to complete future acquisitions or divestitures and the risks resulting therefrom; any supply chain disruptions impacting our industry and business, market factors, Asbury's relationships with, and the financial and operational stability of, vehicle manufacturers and other suppliers, acts of God, acts of war or other incidents and the shortage of semiconductor chips and other components, which may adversely impact supply from vehicle manufacturers and/or present retail sales challenges; risks associated with Asbury's indebtedness and our ability to comply with applicable covenants in our various financing agreements, or to obtain waivers of these covenants as necessary; risks related to competition in the automotive retail and service industries, general economic conditions both nationally and locally, governmental regulations, legislation, including changes in automotive state franchise laws, adverse results in litigation and other proceedings, and Asbury's ability to execute its strategic and operational strategies and initiatives, including its five-year strategic plan, Asbury's ability to leverage gains from its dealership portfolio, Asbury's ability to capitalize on opportunities to repurchase its debt and equity securities or purchase properties that it currently leases, and Asbury's ability to stay within its targeted range for capital expenditures. There can be no guarantees that Asbury's plans for future operations will be successfully implemented or that they will prove to be commercially successful.

These and other risk factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements are and will be discussed in Asbury's filings with the U.S. Securities and Exchange Commission from time to time, including its most recent annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240624874678/en/

Investors & Reporters May Contact:

Joe Sorice

Manager, Investor Relations

(770) 418-8211

ir@asburyauto.com

Source: Asbury Automotive Group, Inc.

FAQ

What was the date of the cyber incident affecting Asbury Automotive Group?

The cyber incident was identified on June 19, 2024.

What vendor was involved in the cyber incident with Asbury Automotive Group?

The vendor involved in the cyber incident was CDK Global.

Which services of Asbury Automotive Group were impacted by the cyber incident?

The cyber incident impacted sales, service, inventory, CRM, and accounting functions.

Are all Asbury Automotive Group locations affected by the cyber incident?

No, Koons Automotive locations and the Clicklane platform remain largely unaffected.

Is the financial impact of the cyber incident on Asbury Automotive Group known?

The full financial impact of the cyber incident is currently unknown.

What measures did Asbury Automotive Group take after discovering the cyber incident?

Asbury took immediate precautionary steps to protect their systems and implemented contingency plans.

What is the stock symbol for Asbury Automotive Group?

The stock symbol for Asbury Automotive Group is ABG.