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Contxto – Some may say that online car marketplaces are experiencing a renaissance in Latin America.
With SoftBank investing in startups such as Volanty and Kavak, the latest company to make a big splash is the Frontier Car Group (FCG). Based in Berlin but with Chilean origins, recently the OLX Group announced plans to increase capital investments for FCG to up to US$400 million.
Due to this new operating capacity, FCG’s valuation will reportedly grow to about US$700 million. Mobilized to digitize the automotive sales sector, FCG aspires to make the sector more efficient in emerging markets.
Active in 10 countries, what began three years with five entrepreneurs with an initial investment of US$2 million now has the potential to become Chile’s first unicorn, according to sources.
Higher capital investments
In case OLX doesn’t ring a bell, it’s part of Prosus’ global investment network specializing in online classifieds. Based on its background, OLX will assist FCG to expand its subsidiaries, VéndenosTuAuto.com and Autobastas.cl. Moreover, it will become FCG’s largest shareholder, having previously invested US$89 million last year.
Moving forward, FCG will reportedly merge with OLX. However, I’m still waiting to hear back from founders regarding what this will entail.
Higher capital will also allow FCG to expand into more countries, in addition to improving technology and developing more products. For Ignacio Detmer, co-founder and COO for FCG Americas, the industry is finally starting to embrace tech innovations.
“Since we co-founded FCG, the company has sought to revolutionize an industry that is not accustomed to innovation,” said Detmer.
“Through the incorporation of technology and always having the customer at the center, we have achieved the objective of positioning our value proposition and becoming the benchmark of the markets where we operate the ‘instant purchase’ of cars and the mass supply to automotive.”
FCG car platforms
Regarding VéndenosTuAuto, this “instant purchase” platform is where FCG buys cars from users, providing easy liquidity in the process. This division has 40 physical stores in Chile, according to El Financiero.
With Autobastas, the group sells vehicles to auto dealers through auctions with updates three times a day. This sort of arrangement is to help other companies succeed in the car industry.
“It doesn’t matter in which cities the automakers are located, their characteristics or their size, we give equality to all to compete in this new field,” said Detmer.