Kavak, the renowned Mexican unicorn specializing in the sale and purchase of used cars, has recently announced an indefinite pause in its operations in Colombia and Peru starting January 2024. This move represents a significant shift for the company, which had begun its activities in these countries in mid-2022.
The Mexican firm, known for its innovative approach in the used vehicle market, has stated it will continue its activities in Colombia and Peru until all ongoing operations with clients, suppliers, and teams are completed. This decision follows a thorough evaluation of market opportunities in these regions, considering the current global and local macroeconomic environment and future projections.
Kavak has conveyed that although its experience in Colombia and Peru has been enriching in learning and application in other regions where it operates, its current strategy is focused on markets with higher profitability and growth potential.
This news comes after Kavak’s enthusiastic expansion announcement to Colombia and Peru in July 2022 while maintaining operations in Chile. The company also operates in Turkey, Argentina (having acquired Checkars in 2020), and Brazil (where it started operations in 2021).
In May 2023, Kavak made significant strides in Colombia by opening a vehicle refurbishment plant, investing an initial USD $2.1 million to capture a minimum of 5% of the local market and reach sales of 5,000 units per month. However, these ambitious plans were also accompanied by staff cuts across various locations.
Kavak became a benchmark in the Mexican startup ecosystem in 2020 by reaching a market valuation of USD $1,000 million, establishing itself as Mexico’s first unicorn. In 2021, an investment round led by Japan’s SoftBank propelled the company to the second most valuable startup in Latin America, only surpassed by the Brazilian giant Nubank. As of September 2021, Kavak was valued at USD 8.7 billion, according to CB Insights.
Kavak’s announcement regarding its withdrawal from Colombia and Peru reflects a strategy focused on consolidation and growth in critical markets, adapting to the changing dynamics of the global economic and business environment.
The January 2023 edition of CB Insights ranking of the world’s most valuable startups includes 31 companies of Latin American origin. Kavak, the company behind the Mexican online car buy-sell platform, is the most valuable unicorn in the region, valued at no less than USD $8.7 billion.