KAVAK to Invest US$402 Million in Mexico During 3Q21By Alejandro Enríquez | Mon, 06/28/2021 - 01:04
Kavak has a new Managing Director in Mexico: Alejandro Guerra, who just announced that the company will invest MXN$8 billion (US$402 million) during 3Q2021 to expand into new cities and create over 500 new jobs. "We are working aggressively to formalize the used vehicle market in the country," he said.
With this investment, Kavak aims to double its vehicle capacity. Over the past six months, the company processed around 20,000 used vehicles to later sell them through its website, explained Guerra. In the next six months, the company expects to process at least 40,000 more. The company has 'reconditioning centers' in Jalisco, Nuevo Leon, Puebla, Queretaro, State of Mexico and Mexico City and has 20 selling points in six cities. Through this investment, Kavak plans to grow its presence in the western and northern part of the country.
A major obstacle in the pre-owned and used vehicle market is the paperwork needed to sell the vehicle, which varies from state to state. Guerra mentioned that Kavak is working with state governments to make the paperwork process more efficient and transparent. "As we are formalizing the used vehicle market, state regulations will cease to be a problem," he said.
MBN has documented Kavak’s success as the company became Mexico’s first modern unicorn. In August 2020, amid the ongoing pandemic, Kavak announced its international expansion to Argentina through the purchase of Checkars, its Argentinian equivalent. In October 2020, Kavak became the first Mexican company to surpass the US$1 billion valuation mark at US$1.15 billion. In April 2021, Kavak reached a US$4 billion valuation after adding more than US$485 million through its series D round. The company has also created partnerships with Uber México and BBVA.
"Kavak will be the unquestionable leader in Mexico in its segment. In five years, we will be operating in a few more countries across the region, with a market share similar to what we enjoy in Mexico. All consumers involved in purchasing, selling or financing a vehicle will see Kavak as their first option given the benefits we will offer," said Carlos García when MBN asked for his five-year vision for the company.
For Oscar Silva, Partner Leader of Global Strategy Group at KPMG, Kavak is a success story: "Kavak is the clearest example of a successful business where they send a car over to your house for you to test it. Dealerships and brands should balance an immersive digital experience with a final physical interaction."