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With October upon us, it’s time to spotlight a critical aspect of automotive business operations—cybersecurity. National Cybersecurity Awareness Month is the perfect opportunity for auto dealerships to reassess their digital security measures. In an era where cyber threats are increasingly sophisticated and pervasive, understanding the risks and implementing comprehensive defenses are more important than ever.
Understanding cyber threats to auto dealerships
Like many other businesses, auto dealerships have embraced digital technology to streamline operations, enhance customer experiences, and drive sales. However, this digital transformation also opens up multiple avenues for cyberattacks, the most common being phishing scams, data breaches, and ransomware attacks.
- Phishing scams involve deceptive emails designed to trick employees into revealing personal information or downloading malicious software.
- Data breaches, where unauthorized individuals gain access to sensitive information, can lead to significant legal and financial repercussions.
- Ransomware attacks are particularly damaging; they encrypt data and demand payment for its release.
The fallout from a cyber attack can be severe, often resulting in financial losses, not only from direct costs such as ransom payments but also from expensive legal actions, downtime, and recovery efforts.
Operational disruptions from cyber attacks can affect sales and service capabilities, causing long-term damage to the business. A tarnished reputation can result in a decline in customer loyalty, making it difficult to recover even after resolving the immediate issues. A study from the Ponemon Institute found that 58% of consumers would switch dealerships if their data were compromised.
Cybercriminal activity in the automotive industry
Just this past June, CDK Global, a leading provider of dealership management systems, experienced cyberattacks that led to the shutdown of its systems across North America, impacting approximately 15,000 dealerships to varying degrees.
Staggering data makes it clear that the automotive industry is a huge target of cyber criminals:
- Over the last three years, cyberattacks have increased 225% in the automotive industry.
- The automotive sector could face a $505 billion loss in 2024 due to cyberattacks.
- Between 2021 and 2023, data breaches increased by 72%, a record high. The cost per breach was $5.09 million.
- Approximately 36% of data breaches at dealerships are related to phishing.
5 strategies for strengthening cybersecurity
To protect customer information for financial institutions, including dealerships, the Federal Trade Commission issued a Safeguards Rule, which requires dealers to comply with certain procedural, technical, and contractual steps. This rule had a compliance deadline of June 9, 2023.
In addition to complying with the Safeguards Rule, dealership owners must take proactive steps to secure their business.
Here are 5 strategies to follow:
- Regularly update software. Use strong passwords and deploy multi-factor authentication (MFA). The use of MFA on accounts reduces the risk of successful attacks by 99%.
- Monitor, monitor, monitor. Implement a robust monitoring solution to detect suspicious activities as early as possible to mitigate damage and reduce recovery time.
- Back up data. Regularly back up critical data and test recovery procedures to ensure that you can quickly restore operations in case of an attack. Cybersecurity Ventures estimates that 60% of small companies go out of business within six months of experiencing a major data breach or cyberattack.
- Secure customer information. Encrypt sensitive customer data at all times and ensure compliance with data protection regulations, such as the FTC Safeguards Rule, Disposal Rule, Gramm-Leach-Bliley Act Privacy Rule, and breach notification laws for your state.
- Train staff. Unfortunately, employees are a major factor in cybersecurity incidents. Train employees on how to recognize phishing attempts and follow secure practices. Regular training has the power to reduce your risk by as much as 70%.
New automotive cybersecurity tools and solutions are being developed every day utilizing artificial intelligence and machine learning to improve threat detection and enhance overall security.
The road ahead for the automotive industry
The automotive cybersecurity market is set for substantial growth over the next decade at a CAGR of 22%. By 2032, this market is projected to reach a staggering $22.2 billion.
As the automotive industry continues to evolve with new technologies, cybersecurity will remain a critical concern. National Cybersecurity Awareness Month serves as a timely reminder for auto dealerships to evaluate their security plans and take proactive measures to safeguard their operations and reputations.
