Kavak's business model
The pioneering Mexican startup that has disrupted the automotive industry by achieving a valuation exceeding $1 billion within three years of its inception.
Founder Carlos García Ottati sheds light on the company's distinct strategies, including a globally unparalleled vehicle reconditioning capability and a data-driven competitive edge. This article explores the multifaceted success story of Kavak, and its impact on the automotive sector.
Business overview
Kavak is the first Mexican startup with a valuation exceeding $1 billion.
In three years, it achieved annual revenues of $30 million and currently sells more in a month than it did in its first four years.
The company plans to purchase over 120,000 vehicles this year, operates in seven countries, and records total revenues in the billions within eight years.
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Key business strategies and capabilities
Kavak has developed a globally unique vehicle reconditioning capability and boasts a data analysis platform as a competitive advantage.
In addition to the buying and selling of vehicles, Kavak is building a massive financial arm that places more auto loans than most banks in Mexico.
Founder Carlos García Ottati shares insights into how Kavak makes money, its global expansion vision, internal processes, and data utilization, as well as its strategy for loan placement.
Investor confidence
Investors back Kavak with billions due to its ambitious vision and belief in the team's execution capabilities.
Industry transformation goals
The company aims to transform the used vehicle industry, historically associated with negative connotations, through scale and expansion into multiple markets.
Unprecedented nature of the company
Kavak's bet is unprecedented for a Mexico-born company, but venture capital funds trust in its concept and execution capability despite challenges and uncertainties.
About their business model. How does Kavak make money? Carlos talks about how they are thinking beyond the margin of the vehicle buying and selling transaction, addressing pricing, turnover, and the long-term relationship they aim to establish with their customers.
The global vision. Why does Carlos insist that growing in multiple countries simultaneously makes sense.
Processes, HR, and data. We took a tour of their first center to see some of the processes related to vehicle reconditioning. We discussed mechanics (Carlos wants Kavak to be "the McKinsey of mechanics"), how they use data for everything, and the challenges with auto parts. The entrepreneur defines this center as a 'Frankenstein' — others, he insists, have been evolving and becoming increasingly efficient.
Placing credit. Why does he believe his startup is better at placing this type of credit? How do they do it?
The valuation. Why have investors backed them with billions of dollars? How much should Kavak be worth?
What's next — what do they expect to happen in the coming years? Do they require more investment?
The ambition to build something gigantic. Some reflections on his vision and the challenge of trying to create a truly global company, and a conversation he had with his dad when launching Kavak.
Special thanks to the Everyone team, who assisted us with the recording and editing of these interviews and tours.