RIO DE JANEIRO, BRAZIL – Kavak on Tuesday (27) announced that it is opening operations in Brazil with a R$2.5 billion (US$483 million) investment to make the country its main market for buying and selling used cars by 2022, surpassing its parent company in Mexico.
According to Kavak Brasil’s CEO Roger Laughlin, the funds will be used to start building an inventory of up to 100,000 vehicles in the country by next year, double the team to 1,000 employees by December, and open a mega automotive hub in Barueri, Greater São Paulo.
“Brazil will very quickly become our main market,” said Laughlin, the company’s Venezuelan co-founder.
The announcement comes months after the startup founded in 2016 to simplify the purchase of used cars in emerging markets, received in April a US$485 million injection of new funds, with the main goal of debuting in Brazil.
The startup’s business intermediation includes credit – its own and from banks – and mechanical and legal servicing, after which it offers a 2-year warranty with the option of returning vehicles within 7 days if customers are unhappy with their purchases.
Rated by Kavak as the world’s 3rd largest automotive market in sales volume, behind the United States and China, Brazil has been witnessing the proliferation of technology-based companies to mediate the purchase and sale of used cars, a highly fragmented market.
Kavak will share space with smaller local rivals such as Volanty and Argentine Karvi, which have also received tens of millions of Brazilian reais in venture capital from international investors.
However, the amount pledged by Kavak is much higher, with the company planning to open dozens of small centers inside BRMalls, Iguatemi and Multiplan shopping centers around the country in coming months.
“There are many business opportunities in a market as large as Brazil, and not just any company can do what we intend to do in the country,” Laughlin said, noting that the company may be in a position to interact with sectors such as insurance and auto parts.