US auto sales expected to slip in June on CDK cyber outage, report shows

(Reuters) - New vehicle sales in the United States are projected to fall in June from a year ago, hurt by the CDK cyber attack-led outage that has impacted dealers across the country, according to a joint report by industry consultants J.D. Power and GlobalData on Wednesday.

WHY IT IS IMPORTANT

The CDK outage is the latest hiccup for automakers in the United States, with over 15,000 retail locations in the country relying on the retail technology and software provider.

This outage has forced some U.S. auto dealers to switch back to manual paperwork as CDK works to restore systems.

The sales numbers, closely watched by analysts and the industry, have been in focus over the past few days as experts look to quantify an impact from the situation.

BY THE NUMBERS

Total new vehicle sales for June 2024, including retail and non-retail transactions, are expected to reach between 1,336,800 and 1,273,600 units, a 2.6% to 7.2% decrease from a year ago.

Transaction prices are trending towards $44,857, down $1,372 or 3% from a year ago. While the average incentive spend per vehicle has grown 51.2% from a year and is on track to reach $2,625.

Total retailer profit per unit - which includes vehicles gross plus finance and insurance income - is expected to be $2,407, down 32.3% from June 2023.

KEY QUOTES

"Because of the disruption to dealer software systems, June sales will not be reflective of actual consumer demand for new vehicles," said Thomas King, president of the data and analytics division at J.D. Power.

"However, it (CDK outage) will not affect overall demand in the long term. Sales will be delayed, but the majority will likely occur in July shortly after the situation is rectified and sales are being made despite system outages," King added.

(Reporting by Nathan Gomes in Bengaluru; Editing by Maju Samuel)