- Mexican used-car marketplace Kavak is investing $180 million to expand its platform.
- The company has set aside $60 million for its expansion to Istanbul, Turkey.
- Turkey is a $120 billion market, so there is a significant possibility of success.
The Mexican used-car marketplace Kavak is investing $180 million to set up offices and expand its platform into four new nations, including Turkey, which will be its first base outside of Latin America.
With a planned investment of $120 million, Kavak, which bills itself as the largest used automobile enterprise in the world, will enter Colombia, Chile, and Peru. CEO Carlos Garcia announced that the company has set aside $60 million for its expansion to Istanbul, Turkey.
Turkey is a $120 billion market, so there is a significant possibility, Garcia told Reuters. He went on to say that they experience the same issues with used car fraud and problematic financing that we do in Mexico and Brazil.
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Garcia estimates that the $8.7 billion business sponsored by SoftBank (9434.T) has grown quickly in its native Mexico, where 60 percent of its activities are based. Additionally, Kavak is active in Brazil and Argentina.
But there have been some hiccups along the way. Less than a year after expanding to Brazil, Kavak terminated approximately 150 positions from its Sao Paulo and Rio de Janeiro businesses this month. According to Garcia, this was due to investing ahead of growth and the need to adapt to shifting market conditions.
Kavak is not currently anticipating “huge layoffs,” Garcia continued.
Additionally, the business has been the target of widely reported social media complaints regarding its customer service in Mexico.
Garcia ascribed some of that to backlogs caused by widespread closures of government facilities, which caused the documentation required for used-car purchases to be delayed.
Garcia remarked, “We have a segment of users that we could probably service better.
He continued, referencing the informality of the used-car market, “What I like to question my consumers is what happens if Kavak doesn’t exist?”
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