By Valentine Hilaire

MEXICO CITY, Oct 11 (Reuters) - Mexican online used-car dealership Kavak has expanded to the United Arab Emirates (UAE), Oman and Saudi Arabia, boosting its presence in emerging-market countries, the firm's chief executive, Carlos Garcia, told Reuters on Tuesday.

Kavak plans to invest $130 million over the next two years in the three Middle-Eastern countries, which are set to represent 7-10% of its business, Garcia said.

The SoftBank-backed platform, which is valued at $8.7 billion and claims to be the most valuable startup in Latin America, entered the UAE and Oman through a merger with local company Carzaty. It set up its own operations in Saudi Arabia.

"The consumers of these three markets are looking for luxury cars at lower prices... so used cars in excellent condition are an option they would opt for," Garcia said.

Garcia said some 40% of transactions in the used-car market end in fraud and Kavak's algorithm can help guarantee safe sales and create a price structure for a "virgin" market.

The used-car market is worth an estimated $35 billion-$40 billion in Gulf countries, according to company data.

Kavak, which buys used cars, fixes them up and resells them, has grown quickly in its six years of existence and now operates in 10 countries.

In July it announced a $180 million investment to expand into Chile, Colombia and Peru, as well as Turkey, its first venture outside Latin America.

However, its fast-paced growth has encountered some speed bumps along the way. Kavak cut more than 100 jobs from its Brazilian offices in June and has faced criticism online about its customer service in Mexico.

"We recalibrate our workforce every year," Garcia said, asked about the layoffs. He said customer satisfaction levels have risen in Mexico, with around 70% of users recommending Kavak after purchasing services.

Kavak is not planning any additional expansions this year and will focus on its existing operations. (Reporting by Valentine Hilaire; Editing by Leslie Adler)