Mexican used car platform Kavak is expanding its business to the United Arab Emirates, Oman and Saudi Arabia, increasing its presence in emerging market countries, the firm’s CEO Carlos Garcia said.
SoftBank-backed Kavak plans to invest $130 million over the next two years in the three Middle Eastern nations, which will account for 7-10% of its business, the executive added.
The platform, valued at some 8.7 billion dollars, entered the United Arab Emirates and Oman through a merger with the local company Carzaty, while in Saudi Arabia it established its own operations.
“There is a phenomenon that customers in these countries want luxury cars at lower prices, so used cars in excellent condition are the options they are opting for,” Garcia said in an interview with Reuters on Tuesday.
The second-hand car market is worth an estimated $35 billion to $40 billion in the Gulf countries, according to company data. Kavak, which buys used cars, repairs them and resells them, has grown rapidly in its six years of existence and now operates in 10 countries.
In July it announced an investment of 180 million dollars to expand to Chile, Colombia and Peru, as well as Turkey, its first company outside of Latin America. However, its rapid growth has hit some bumps in the road. Kavak cut more than 100 jobs from its Brazilian offices in June and has faced criticism online about its customer service in Mexico.
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