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Last week, a hail storm walloped a Missouri CDJR dealership's inventory just before midnight.
Florida-based Ed Morse Automotive Group’s acquisition of the store was set to become official that morning, but sorting damaged inventory delayed the closing several hours.
It got me thinking: What are the most prominent risks worth planning for right now?
So here we are, with three dangers threatening dealer profitability and security, and how to keep the money safe when they occur.
Extreme storms are falling on new and familiar markets.
Unfortunately, the skies haven’t been stingy with ice chunks. Before the Missouri incident, a wicked thunderstorm tore through northeast Ohio on April 15.
It cut power, flooded streets, and temporarily halted sales for a slew of auto retailers.
In this case: More than 20 dealerships sit along the Bedford Auto Mall, near Cleveland. The April storm sent employees and customers running for cover while hail the size of golf balls pounded the cars sold there, leaving hundreds of dents behind.
About 800 vehicles were pelted at three dealerships owned by Ken Ganley Automotive Group.
"The only cars that weren't damaged were sitting on the showroom floors," CEO Ken Ganley told me.
Ken Ganley
Ganley Automotive Group
All will require repair by outside vendors. Although parts and service stayed open, sales stalled because they didn’t have cars to sell.
"We've really pretty much been out of business at those stores," Ganley said.
Lemonade from ice pellets: After the insurance quote arrives, they can plan their "Hail Sale.” Customers will have the choice to buy a car with dents or at a discount. Those sales happen regularly in the southwest, where stores often keep inventory covered as a precaution.
Ganley operates more than 60 stores across four states, including in Florida, where Hurricane Helene taught an expensive lesson in storm prep.
The September 2024 storm totaled 672 vehicles at Ken Ganley Kia New Port Richey, for an estimated $29 million in damages (about $3.5M after insurance). And that’s with the more costly Florida insurance.
The issue: Ganley said they underestimated the hurricane risk and didn’t have a proper plan in place.
That has changed.
Inventory now moves to a designated location and a vendor installs a protective barrier on the building when a storm approaches.
Also in Florida: Cole Potamkin, CEO of Potamkin Automotive Group, said electric vehicles have forced them to rethink their lot layout. EVs now get first dibs on higher ground and covered storage, and are kept away from tree lines and glass.
"A flooded lithium-ion pack isn't just a totaled vehicle," Potamkin said. "It's a fire risk that can take out the cars parked next to it and more, so the downside is different than it was years ago."
Cole Potamkin
Potamkin Automotive Group
He added: Backup generators are essential to keep the dealership functioning the day after a storm.
"Our generators are sized to run the DMS, F&I systems, parts, and enough service capacity to start helping customers immediately,” Potamkin said. “Getting people's vehicles back on the road fast is part of the recovery."
Unlike sporadic hail storms (as seen above), hurricanes give more lead time, Teddy Morse, CEO of his namesake group, told me.
Their Florida stores have hurricane teams that execute plans, including coordinating generators, getting employees home safely, and protecting inventory by moving it inside.
“You put the cars in the service department,” Morse said. “You put them in the showroom. You pack them in there tight, like sardines. You put a car on a lift, and stuff another one underneath it.”
Teddy Morse
Ed Morse
Automotive Group
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Sophisticated fraud is hitting dealers from every angle.
Auto lending fraud hit $10.4 billion in exposure in 2025, up 13% year-over-year, according to Point Predictive's 2026 Auto Lending Fraud Trends Report.
First-party fraud is surging, led by bust-out schemes where fraud rings send straw borrowers into dealerships to stockpile cars in a 30-day window to avoid credit detection.
The problem: AI is contributing to the uptick in fraud cases, according to Frank McKenna, co-founder and chief fraud strategist at Point Predictive.
"It appears that [the increase in fraud] is being driven by, in some parts, artificial intelligence, which is making it super easy for the average person who doesn't know how to commit fraud," McKenna said.
Frank McKenna
Point Predictive
How they do it: AI can help generate fake paystubs and bank statements. Social media reels teach how to use stolen social security numbers to fraudulently finance cars. And don’t forget credit washing: Thief buys car, thief cries identity theft, lender removes loan, rinse and repeat.
How dealers can fight back: McKenna suggests fraud training as an onboarding segment, not just an annual event.
That’s because trained people can leave and get replaced with new employees that will remain vulnerable if they arrive after the annual training session.
On that note, reducing turnover helps, too.
In real time:
Check for math that doesn’t add up on paystubs. Forgers focus on the amount and may mess up math on deductions.
Look for generic employer websites, especially ones with just one number that goes to HR (some have a burner phone manned to confirm employment). Consider passcode verification, too.
Trust your gut: A young borrower claiming $250,000 in income with one credit card is a red flag, not a dream customer.
Technically speaking: Dealers can invest in AI-powered scanners that connect to the DMV to verify licenses in 20 seconds, especially helpful for fraudsters coming with out-of-state IDs.
"What these criminals are doing is probing constantly for the weakest link," McKenna said. "And the weakest links are those dealerships that don't have a culture of fraud awareness."
A new AI model is cracking legacy software in seconds.
In case you missed it: Anthropic released a new AI model called Mythos in April and immediately deemed it too dangerous for public use. Mythos can identify undetected vulnerabilities in legacy systems, including software built before the internet existed.
Some of the world's largest software companies have it now.
Adam Gillrie, founder of Savvy Dealer and BiFrost Strategies, helped put it in perspective.
"The same day I get Mythos, the hackers will get Mythos," Gillrie said. "And then I have to try as fast as I can to rewrite core software in my company before a hacker stumbles upon my server and asks Mythos to break it."
Adam Gillrie
Savvy Dealer
CDK Global's 2025 State of Dealership Cybersecurity report found that nine out of ten dealers say cybersecurity is very or extremely important, yet less than half feel confident their systems will protect them.
Although the Mythos threat could be overhyped, Gillrie pointed out there’s no downside to preparing.
Dealers can:
Get written assurance from every vendor, DMS, CRM, F&I provider, etc., that they are aware of the threat and have a response plan.
Once available, use Mythos to find vulnerabilities before someone else does.
Make sure every new hire gets cybersecurity training.
The bottom line: It’s not that weather, fraud, and cybersecurity are new threats.
But each is becoming more widespread and often more intense.
The good news is, there's never been so many resources available to mitigate these risks, and to have a plan in place so that profits stay dry on the rainiest of days.
