Consolidating the used car market

Our investment in Kavak

The century-old car industry is still an important pillar of the modern economy, as the automobile is one of the most desired and expensive assets someone acquires during a lifetime.

While the new car market is dominated by a few auto manufacturers, the U$1 trillion global used car market is comprised of an informal, fragmented, and unreliable network of used car dealers.

Since the 60s, when the stereotype of the sleazy used car salesman was created, the main issues surrounding the industry remain the same: trust and transparency. These are reasons why online penetration of used car sales is virtually zero, even though +70% of consumers initiate their vehicle search process online.

In Brazil, where near 10 million used cars are sold annually through a shattered network of 50 thousand car dealers, the situation is even worse. Such market opportunity made us fly to Mexico City in late 2019 to meet Kavak.

After a 7-hour conversation at Kavak’s reconditioning center in Lerma, we were struck by Carlos’ compelling vision to change how people own cars. In less than five years Kavak has created a trusted brand among customers by building a full stack online retail operation to centralize sourcing, reconditioning, selling, and financing.

Kavak’s end-to-end operation enables:

  1. Best pricing in the market for sellers without the hassle of selling to another person
  2. Trust and transparency for buyers with a 7-days return policy and a 3-month warranty
  3. Convenience with one-tap distance insurance, maintenance, and trade-in services

After selling tens of thousands of cars in Mexico, Kavak is finally setting foot on Brazil – the 3rd largest market globally after the US and China.

We are thrilled to partner with Carlos, Roger, and Lori in such a relevant stage of growth for Kavak.