Kavak: Mexico’s Unicorn Reaches US$4 Billion ValueBy Jorge Ramos Zwanziger | Fri, 04/09/2021 - 18:11
Kavak, a Mexican platform focused on the purchase and sale of used vehicles, reached a US$4 billion valuation after raising US$485 million, making it one of the best-valued startups in Latin America, reports Forbes Mexico. The company, founded in 2016, has been labeled Mexico’s first tech unicorn, according to Forbes Mexico. “Kavak has been in the market for four years and, during this time, we have become the country’s No. 1 platform for selling and purchasing used vehicles. More importantly, given current circumstances, we are the only alternative that allows people to sell or purchase their vehicle without leaving their home,” said Carlos García, CEO of Kavak, in an interview with MBN.
Was the COVID-19 Pandemic a Challenge?
García mentioned that Kavak was the main online alternative for transactions concerning the sale and purchase of used vehicles. He noted that because of the pandemic, people were prioritizing social distancing, which could be seen in the growth of private vehicle sales, particularly in the used-vehicle segment given its affordable prices. “If we add social distancing and the fact that people are also prioritizing savings given the harsh economic conditions, those are ideal conditions for a company like Kavak to be successful,” said García.
The pandemic altered mobility preferences all over and, according to García, Kavak has been able to adapt. “We are more advanced in understanding what the customer wants. All of our business initiatives are 100 percent focused on escalating all the elements we know our customers are looking for.” To bring even better services to its customers in Mexico, the company has invested in recruiting more employees. During the last three months, the company hired around 1,500 people, according to Forbes Mexico, bringing its workforce to 2,500 employees.
What is Kavak’s Next Step?
The company’s COO, Federico Ranero, in an interview with Forbes Mexico, said that the company is starting to look for ways to operate in South America. “I can say now that we are starting to work in Brazil; we are building whole new machinery from scratch. We already bought hundreds of vehicles and are already looking into taking the next step,” Ranero told Forbes Mexico. Brazil, the largest economy of Latin America, could surpass all of Kavak’s other markets. “We definitely forecast Brazil as the biggest market for Kavak,” said García to Reuters. “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,” García told MBN.
The process is not so simple, however. The company has to make big investments to create adequate logistics and distribution channels. “Expansion processes are always difficult. We have now 20 centers throughout Latin America. The idea with this territory (Brazil) is to grow even more,” said Ranero.