QUESTIONS TO ASK YOUR VENDOR Dealers should also engage in proactive dialogue with DMS providers. Helpful questions include: • What cybersecurity frameworks and third-party audits do you follow? • How often are backups tested and how quickly can service be restored? • What is your incident notification process and timeline? • How will you support dealers in complying with federal and state privacy laws in the event of a breach? • What contractual flexibility exists if a major outage occurs? These questions foster transparency and demonstrate a dealer’s commitment to partnership. LOOKING FORWARD The DMS is indispensable to every dealership. Providers and dealers share an interest in resilient, secure systems that protect data and ensure business continuity. Contract negotiations like the ones suggested here only benefit and protect both parties, aligning risk with responsibility and promoting long-term trust. The CDK incident is not the last cyber event the industry will face. Technology will continue to evolve, as will the threats. Dealers that treat their DMS agreements and insurance coverage as part of their risk-management program will be better positioned to withstand future disruptions. CONCLUSION If the events of 2024 taught dealers anything, it is that a DMS contract is just as critical as a floorplan financing agreement or franchise document. Take the time to review your contracts and insurance policies with experienced auto industry counsel. Doing so now helps ensure that when the next challenge comes, dealers and providers can move forward with resilience. “We have a fantastic relationship with the LSL team. They keep our interests top of mind and maintain a positive reputation in the industry.” —Craig Whetter, President | David Wilson Automotive Group (relationship since 1983) Adam Odom, CPA, Partner Assurance & Advisory adam.odom@lslcpas.com LSL | CPAs & Advisors | Irvine & Sacramento, CA | The Woodlands, TX | lslcpas.com/automotive | 949.829.8299 Donald Slater, CPA, Principal Consulting & Advisory donald.slater@lslcpas.com David Myers, MST, CPA, Partner Tax & Advisory dave.myers@lslcpas.com Dealers that treat their DMS agreements and insurance coverage as part of their risk-management program will be better positioned to withstand future disruptions. 18 SAN DIEGO DEALER
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