CDK Hack Hits Auto Sales Gas prices and auto sales fall in dollar terms but boost consumer spending after adjusting for inflation.
From WOLF STREET by Wolf Richter.
Retail sales, excluding gasoline and auto sales, increased 0.8% from May on a seasonally adjusted basis, the largest increase since January 2023, spread across many retail categories including a strong increase in e-commerce sales. Year-over-year increases were up 3.8%. This monthly increase prompted the Atlanta Fed to raise its GDPNow forecast for second-quarter GDP growth to 2.5% today, from 2.0% last week.
The Atlanta Fed’s GDPNow Q2 real GDP forecast was updated today with June retail sales data, which raised the real GDP forecast to 2.5% today, from 2.0% last week. For the U.S., real GDP growth of 2.5% is well above the long-term average of just under 2%. GDPNow’s real consumer spending growth rate increased to 2.1% from 1.6%.
CDK hack and low prices.
Sales at new and used car dealerships and parts stores are the largest category in retail sales, accounting for 19% of the total retail sales. On June 19, a ransomware attack on CDK’s cloud-based dealer management system took down dealership computers until the 19th of that month, impacting sales at 15,000 car dealerships. This reduced their ability to process car and parts sales in June, leading major car dealers to warn of the impact on their second quarter revenues and profits, and hitting June car sales. Sales not processed in June will be processed in July.
Additionally, dollar sales at auto dealerships (19% of total retail sales) and gas stations (7.7% of total retail sales) experienced significant price declines in June, sending used vehicle prices into a historic downward spiral and erasing 60% of the extraordinary price increases of 2021 and 2022. Retail sales do not adjust for price fluctuations; lower prices caused dollar sales to fall, but sales volumes did not fall. However, lower auto and gasoline prices (deflation) have boosted deflation-adjusted “real” consumer spending on these items, the opposite of when high inflation on these items caused “real” consumer spending on these items to fall.
Total Retail Sales.
Total retail sales in June were seasonally adjusted at $704 billion, unchanged from May, and up 2.3% from a year earlier, despite ransomware hacks and widespread price declines for many goods, including cars, electronics and furniture.
Retailer’s largest category sales.
New and used car dealers, parts stores (19% of total retail). June saw a 2% month-over-month decline, primarily due to 15,000 dealerships being unable to process sales following the CDK hack.
Sales have remained relatively flat over the past 18 months because prices have fallen. The number of vehicles sold, or sales volume, has increased year-over-year throughout the year for both new and used vehicles.
- Revenue: $131 billion
- Month-on-month: -2.0%
- YoY: -2.2%
E-commerce and other “non-store retailers” (17% of total retail) includes e-commerce retailers, the e-commerce operations of brick-and-mortar retailers, and food stalls and markets.
- Revenue: $123 billion
- Month-on-month: +1.9%
- YoY: +8.9%
restaurant (13% of total retail, including restaurants, cafes and bars). This chart shows the three-month moving average (3mma). You can see the slowdown earlier this year and then a re-acceleration over the past three months.
- Revenue: $95 billion
- Month-on-month: +0.3%
- YoY: +4.4%
Food and beverage stores (12% of total retail value):
- Revenue: $83 billion
- Month-on-month: +0.1%
- YoY: +1.9%
General shop, Excludes department stores (9% of total retail volume).
- Revenue: $65 billion
- Month-on-month: +0.5%
- Month-on-month, 3mma: -0.2%
- YoY: +3.5%
gas station (8% of total retail sales). Gas station sales are roughly tied to gasoline prices, and as gasoline prices have fallen over the past few months, dollar-based sales have also fallen.
- Revenue: $52 billion
- Month-on-month: -3.0%
- Month-on-month, 3mma: -1.2%
- YoY: -0.4%
Sales at gas stations (billions of dollars) (including other products sold by gas stations) (red, left axis) vs. Consumer Price Index for gasoline (blue, right axis):
Building materials, gardening supplies, and equipment stores (6% of total retail). The pre-pandemic trend line is shown in blue.
- Revenue: $41 billion
- Month-on-month: +1.4%%
- Month-on-month, 3mma: +0.4%
- Year-on-year change, 3mma: 5.7%
Clothing and accessories stores (3.7% of retail):
- Revenue: $26 billion
- Month-on-month: +0.6%
- Month-on-month, 3mma: +1.3%
- YoY: +4.3%
Other retail stores (2.2% of total retail): Specialty stores, including cannabis stores.
- Revenue: $15 billion
- Month-on-month: +0.3%
- Monthly change 3mma: -0.9%
- YoY, 3mma: +4.3%
Department store (Today, it’s down to just 1.5% of total retail sales, down from about 10% in the 1990s.) E-commerce sales by department store chains aren’t included here, but they are included in e-commerce retail sales above. This chart is typical of what we began documenting in 2016 in our column, “Brick and Mortar Meltdown.”
- Revenue: $11 billion
- Month-on-month: +0.4%
- Month-on-month, 3mma: +0.3%
- YoY, 3mma: -0.6%
- From 2001 peak: -43%.
Furniture and interior goods store (1.6% of total retail). Many furniture and furnishings sales are shifting to e-commerce, leaving brick-and-mortar retailers that specialize in furniture and furnishings.
- Revenue: $11 billion
- Month-on-month: +0.6%
- Month-on-month, 3mma: +1.0%
- Compared to the previous year, 3mma: -4.4%.
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