Business

Uber partners with SoftBank-backed startup Kavak to offer secondhand cars to its drivers

The financing program will use drivers' activity history generated within Uber's platform – rather than their credit record – to analyze whether or not drivers are eligible

Uber app on smartphone and driver
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  • With the new partnership, Kavak will offer financing to Uber’s partner drivers willing to buy a secondhand car in special conditions;
  • The companies plan to reach 60,000 active drivers in Mexico with the program;
  • To allocate funding to drivers targeted by the program, Kavak Capital, the startup’s fintech arm, will analyze driving and income information within Uber’s platform.

Mexico-based Kavak, an online platform for buying and selling secondhand cars, announced that is teaming up with Uber. The partnership will offer to drivers who work through the ride-hailing app access to financing for the purchase of secondhand cars in special conditions.

“It is about being able to use the collaborative economy and the history that they (drivers) have generated through it to give them access to products and services that were not available to them because they had no credit history and did not have the liquidity for the down payment”, said the Director of Operations at Kavak, Federico Ranero, to the Mexican newspaper El Economista.

The financing proposed by Kavak to Uber drivers differs from that offered by banks and other traditional players, as it uses drivers’ activity history generated within the ride-hailing platform – rather than their credit record – to analyze whether or not they are eligible to a loan.

Former director of Uber in Mexico from 2017 to 2019, Raniero conceived this new program rooted in that previous experience. According to the exec, back at Uber, he realized that once many drivers could not access financing to have their own car, they usually had to rent it.

“Uber has revealed many figures from its platform, for instance, that half of its drivers were unemployed before joining the platform and up to 70% were in the informal economy,” he said.

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Among the program’s special conditions there are weekly payments of $1,500 Mexican pesos, exemption of down payment; and additional vouchers (up to $9,000 Mexican pesos in extra earnings with Uber).

The partnership with Uber will apply to the platform’s driver users in Ciudad de Mexico, Guadalajara and Monterrey, where the companies plan to reach 60,000 active drivers. To allocate funding to drivers targeted by the program, Kavak Capital, the startup’s fintech arm, will analyze driving and income information within Uber’s platform.

Mexican Kavak entered Argentina in August through a merger with used-car platform Checkars and it has plans to Brazil in the next year. The SoftBank-backed platform has become Mexico‘s first tech unicorn after reaching a $1.15 billion valuation. The startup has raised over $400 million in total funding since its founding, four years ago.

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