By Cassandra Garrison
MEXICO CITY – Mexican used-car platform Kavak is investing $180 million to open offices and make its platform available in four new countries, including Turkey – its first location outside Latin America, the company said Wednesday.
Kavak, which calls itself the largest pre-owned car operation in the world, will enter Colombia, Chile and Peru with a planned investment of $120 million. The company has earmarked $60 million for its expansion to Istanbul, Turkey, Chief Executive Officer Carlos Garcia said.
“Turkey is a $120 billion market, so it’s a huge opportunity,” Garcia said in an interview with Reuters. “They face similar problems that we face in Mexico and Brazil,” he added, referring to fraud in used-car sales and difficult access to financing.
The SoftBank-backed startup is valued at $8.7 billion, according to Garcia, and has experienced rapid growth in its native Mexico, which accounts for 60% of its operations. Kavak also operates in Argentina and Brazil.
That scale-up, however, hasn’t come without speed bumps. Kavak cut an estimated 150 jobs from its Sao Paulo and Rio de Janeiro operations last month, less than a year after expanding to Brazil, a result of investing ahead of growth and needing to adjust to changing market conditions, Garcia said.
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Garcia added that Kavak is not currently expecting “massive layoffs.”
The company has also faced highly-publicized social media complaints about its customer service in Mexico.
Garcia attributed some of that to backlogs created by pandemic shutdowns of government offices, delaying the necessary paperwork around used-car sales.
“We have a group of users that we definitely could serve better,” Garcia said.
“What I like to ask my users is what happens if Kavak doesn’t exist?” he added, citing the informality of the used-car market.
(Reporting by Cassandra Garrison; Editing by Josie Kao)