Kavak, a Mexico-based used car startup firm, is opening more Latin American locations. It is launching its first foray outside Turkey as it wants to prove that it can expand to other emerging markets with its online business model based on the “super app.”
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According to Bloomberg News, Kavak is the most valuable startup currently in Latin America. It plans to invest $120 million in Peru, Chile, and Colombia and another $60 million in Turkey. This follows the initial set up of operations in late 2021, according to the founder and CEO Carlos Garcia Ottati in an interview.
Kavak is also cutting costs across Brazil, Mexico, and Argentina because of the worsening economic situation, according to the CEO.
Speaking at the company’s headquarters in Mexico, Chief Executive Officer Garcia Ottati said they are confident of the expansion as the company requires this, but they are conservative. He said that with its proven technology backed by five years of experience, Kavak is planning to get to scale up bigger and become profitable faster in new territories and with a smaller investment.
Kavak was valued at $8.7 billion in private funding last September. The company offers clients used cars online and through brick-and-mortar hubs. Another Phoenix-based used car online dealer Carvana Co. has sunk more than 90% from its peak.
Ottati said that his company was trying to resolve problems in emerging markets where approximately 90% of the deal occurs between individuals. By providing a “super app”, it targeted customers for lifetime association where Kavak can offer swapping cars, insurance, financing, warranties, and paying parking tickets also.
He said the company provides access to car financing and solves fraud using technology. He says Turkey looks promising, and its growth may justify more investments. If they continue in the current direction, the company will have the fastest growing profitable markets.
