What happened with CDK?
CDK Global, the current leader in dealer management software, has been under a Russian cyberattack since June 2024. As the market leader, the CDK outage has affected a majority of new car dealerships through the 4th of July holiday, leaving dealers to scratch their head at missed profit. Dealerships were forced to resort to pen and paper, spreadsheets, or close their doors until they could get back online. The CDK outage estimates a loss to dealers over $1B, according to USA Today. As of now, CDK has returned to offering their service to dealers. However, this has lead to bad taste with longstanding customers and offered an opening to a new tech-centric competitor to gain market share, with a focus on providing a more secure, cloud enabled software.
Here comes Tekion
Jay Vijayan, founder of Tekion, previously worked at Tesla and Oracle. While at Tesla, he was to report to Elon Musk and helped to manage the automakers in-house dealership services, offering sales and servicing to customers. Tekion was founded in 2016 to unify the offerings for auto dealer operational software. Currently, auto dealers rely on several legacy pieces of software for each type of interaction a customer may have at the dealership. While the automotive space has continued to see growth from manufacturers such as Tesla and Rivian, there is a marginal loss to dealers by having to shell out on software for each part of their business. This is where Jay saw the opportunity to package everything into one cloud-native platform for dealers. Customers, generally large dealership groups, can now manage a single Tekion license for their servicing and sales.
Jeff Bezos famous quote of “your margin is my opportunity” is a signal that Tekion is aiming for hyper growth. Jay’s days from Tesla provided the insight that building a vertical platform to streamline operations resulted in a cost-effective system with ease of management. Tekion is the incubation of this vertical platform to all non-Tesla dealerships.
Along with the ransomware attack of CDK and recent funding directed to Tekion, the new competitor is offered the opportunity to win market share. Tekion recently received $200 million in funding from Dragoneer Investment Group to support customer satisfaction and implementation. Tekion will package a single cloud service to provide solutions to auto dealers, similar to the way Microsoft has packaged its Office platform for enterprise businesses. This is a sign that Tekion is prepared to enter a war of attrition with other providers to capture the market in response to the blow up of CDK.