Jaguar Land Rover (JLR) detected a devastating cyberattack on August 31st that took technology systems offline, resulting in halted manufacturing across factories and negatively impacted dealer service and repair operations for over a month.
Some of the diagnostic tools used by dealers are JLR-controlled and unavailable.
The attack was so severe that the UK government intervened with a £1.5 billion loan guarantee to stabilize the supply chain, while Tata Motors, JLR’s parent company, secured an additional £2 billion emergency credit line. The Cyber Monitoring Centre has estimated this event caused a financial impact of at least $2.6 billion in the United Kingdom alone.
With JLR’s interconnected digital infrastructure offline, downstream dealers were impacted. Service departments faced slower service and related customer dissatisfaction, leading to lost revenue and negatively impacting dealers’ bottom lines.
The Case for Cyber Business Interruption Insurance
For auto dealers, especially those tied to large OEMs like JLR which rely on digital infrastructure and just-in-time manufacturing, this incident underscores the critical importance of cyber business interruption insurance. According to Reuters, JLR had been negotiating an insurance policy providing business income loss protection related to cyber events but had not finalized that deal. As a result, JLR has been left to recover without an insurer to step in. Although JLR didn’t have active coverage, some JLR dealers have cyber insurance coverage extending to impacts from cyber breaches at service providers. These policies will help the dealers recover lost business income. Many of these policies also provide coverage for forensic accounting consulting services to assist the insured with their claim.
How Can We help?
Properly calculating lost business income for auto dealers requires a detailed understanding of dealer operations and their nuanced revenue streams and financial statements.
Schneider Downs has a long history of advising vehicle dealers across the country on accounting, tax and other business advisory matters, including specialized expertise in analyzing and consulting on loss of business income for auto dealers related to business interruptions.
Dealer management system service provider CDK experienced a cyber breach that made its system unavailable for a couple of weeks during the summer of 2024. Schneider Downs provided forensic accounting consulting services to several of our impacted auto dealer clients. We reviewed the dealers’ initial lost business income calculations, which had been calculated by a forensic accountant hired by their insurance carrier. Each calculation contained oversights that would have significantly negatively impacted the coverage amounts paid to our clients. After our review and feedback, our clients’ revised calculations increased by approximately 10% to 42%. With our help, our clients received the additional money rightly owed to help with their recovery.
If your dealership was impacted by JLR’s cyber breach and have loss of business income coverage for interruptions caused by service provider breaches, we are here to help make sure you receive what you are due. If you need help navigating your loss of business income claim, including reviewing your insurance carrier’s hired forensic accountant’s loss of business income calculation, please contact our forensic accounting director James Rumph at [email protected] or (614) 586-7012.
About Schneider Downs Business Advisory
Our experienced team of business advisors includes Certified Public Accountants (CPA), Certified Valuation Analysts (CVA), a Master Analyst in Financial Forensics (MAFF), and Certified Mergers and Acquisition Advisors (CM&AA). We leverage our industry expertise to maximize value and minimize risk proactively or during acquisitions, fraud events, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page.
