Mexican startup Kavak lays off staff, cuts expenses

Mexican used car platform Kavak has cut major spending and laid off staff ahead of a challenging 2023, according to an internal email seen by Reuters on Friday.

Carlos Garcia, the startup’s chief executive, said in the email that Kavak made “significant cuts in expenses (…) reducing the size of the team” accordingly.

The email did not specify which regions were affected by the cuts or the number of people laid off. A company spokesperson confirmed the email was sent but declined to provide further details.

The email alluded to a “complex macroeconomic context that projects a challenging 2023 in many sectors” and cited rising interest rates, inflation, conflicts and a contracting economy.

“Since the coming months are difficult to forecast, we have put the company on a faster path to profitability and have made strategic decisions to redesign the resource allocation structure, making significant cuts in expenses and, consequently, reducing the equipment”indicated the electronic text.

Kavak, which operates in 10 countries and has raised funds from Japan’s Softbank group, among others, also said in the email that it will announce “major organizational changes.”

“Now we must concentrate on doing fewer things better”, Garcia said, presenting a plan for 2023 that seeks to limit inventory, focus on the most profitable business lines, improve customer retention, and move products faster and with more warranty options.

Garcia also addressed customer complaints and pledged to boost services: “Today it is very difficult to contact us and we are not efficient in providing the right solution during the first interaction. This must change.”

Kavak, which buys used cars, repairs them and resells them, announced a $130 million plan in October to expand in the Middle East and increase its presence in emerging market countries.

Source: Reuters