Chapter 292: Expansion of the Automobile Industry

It was not until several days after Prime Minister Primo’s funeral that Carlo regained his composure and devoted his energy to Spain’s government affairs and the development of the royal family’s property.

Let’s talk about the development of automobiles first.

Since the successful Auto Expo at the end of December last year, Royal Mercedes-Benz Spain has become a household name throughout Europe.

Through reports in newspapers in various countries, a considerable number of European people learned that Spain had invented a means of transportation that was more efficient than horse-drawn carriages, and that this means of transportation was rapidly spreading throughout Europe.

Benz did not miss this good opportunity to make a lot of money and had already planned to build a branch factory at the beginning of this year.

Taking into account the complexity of the situation in Europe, after discussing with Carlo, Benz changed the original plan of establishing a small number of branches to establishing a branch in each powerful country.

The first is the transportation issue. Cross-border transportation of cars involves expensive tariffs. In addition, the relations between some countries are not so good, which also adds more difficulties to the cross-border sale of cars.

The second issue is production. Judging from the current sales rate of cars, the entire European car market is still very large.

Only by building more branches can the car factory keep up with the sales speed of cars. Only when more cars are sold can the car factory make more money.

In January, the first plant of Royal Mercedes-Benz Automobile Company was established in Italy.

Thanks to the good relations between Spain and Italy, Benz also chose Italy as the first partner of his automobile company.

Soon after, the automobile company established branches in the Austro-Hungarian Empire, the German Empire and France, and production lines were also being rapidly established.

The only European power without an automobile plant was the Russian Empire. Because Spain and Russia had trade cooperation, the tariffs between the two countries were relatively low.

In addition, since the Spanish automobile market would always have a ceiling, Benz decided to develop the Russian automobile market through the Spanish head office.

Although Russia has the largest population in Europe, only nobles and a small number of capitalists can afford cars in Russia.

This is also the reason why Benz was confident that he could develop the Russian market on his own, because there are only a limited number of people in Russia who can afford cars.

In April of this year, the earliest established Italian and Austro-Hungarian branches had already set up production lines and began to produce one new car after another.

In June, the same month that Garibaldi and Prime Minister Primo died, all the production lines of the branch factories had been set up and cars were being produced continuously every day.

Although different branches have different foreign capital participation, Royal Benz Automobile Company holds half of the shares.

Although the cost of producing a car in these newly established car factories will be slightly higher, and labor costs in different countries are also different.

But what is certain is that, outside of Spain and Russia, the Royal Benz Company earned a net income of at least 1000 pesetas for every car sold.

So the question is, what are the car sales data of European countries?

Because automobile factories in different countries were established at different times, automobile sales in each country are also different.

The British branch, which was established later, is still in the state of stockpiling and only sells a small number of cars to British aristocrats and capitalists.

The Italian branch, which was built earlier, has been selling cars for more than a month.

It is worth mentioning that because of the relationship between the royal families of Spain and Italy, the Italian royal family chose to invest in the branch and became the largest shareholder of the Italian Mercedes-Benz branch.

It turned out that Umberto I did not make the wrong choice.

Car sales in Italy have been going on for a month and a half, and more than 1000 cars have been sold so far, with an average of more than 22 cars sold per day.

Italy’s automobile factories are located in northern Italy, which is also the most prosperous industrial region in Italy. Because of the prosperity of industry, the per capita income in northern Italy is higher than that in southern Italy.

Because of this, the salaries of employees recruited by the branch will be higher, and labor costs will naturally increase.

According to the actual situation of the Italian branch, the total cost for producing each car is about 1.38 pesetas.

This was 1200 pesetas more than the cost of the car at the Spanish plant, and nearly half the profit.

Because of this, the price of Italian cars is higher than that of Spanish cars. Given that the cost of the car is 1.38 pesetas, the final price of the Italian car is as high as 1.7 pesetas, which is 2000 pesetas higher than the price of the Spanish car.

However, it is obvious that the price increase of 2000 pesetas did not have much impact on the sales of Italian cars.

Cars as a means of transportation are not something that ordinary people can afford. For the nobles and capitalists, the extra 2000 pesetas are nothing.

Long before the Italian branch was built, Carlo donated 10 cars to the Italian royal family as a gift.

After personally experiencing the convenience and ease of cars, Umberto I also fell in love with this new means of transportation.

He chose to take a car for every trip, which was why he finally chose to cooperate with Spain to build a branch factory, because Umberto I truly experienced the convenience brought by cars.

It was also because of Umberto I’s personal promotion that this novel means of transportation, cars, became popular among Italian nobles.

Although the nobles would not use cars to show off their wealth or to compete with others, anyone in the noble group who did not even have a car would inevitably be looked down upon by others.

In the first month of car sales, these nobles contributed most of the sales.

Of the thousands of cars currently sold in Italy, at least 700 are contributed by these nobles.

When nobles bought cars, they did not just buy one or two, but at least three, four or even more than ten.

Most of the nobles have large families and wealth, not only with large populations, but also with confidants and followers.

If you only buy a few cars, there won’t be enough when you need them. For the nobles, they don’t mind hoarding a few more cars.

Based on the cost of building a car at the Italian branch and the final selling price of the car, the average net income for each car sold is 3200 pesetas.

Of course, since it is a branch in Italy, the monetary settlement must be made in Italy’s official currency, the lira.

However, there is not much difference in the exchange rate between lira and peseta. 1 pound can be exchanged for 25 lira or 26 pesetas.

The Italian branch sold thousands of cars in total, earning a net profit of 310 million lire.

According to the shares between the two parties, Royal Mercedes-Benz of Spain will be able to obtain half of it, which is 155 million lire, about 161 million pesetas.

According to the current automobile sales situation in Italy, the Italian branch alone can provide Royal Mercedes-Benz with a net income of tens of millions of pesetas every year.

This is because the popularity of cars is not high at present. When the car market expands to a certain scale, the income of car manufacturers will continue to increase.

For Umberto I, who invested in the automobile factory, this investment was indeed a big profit.

It only cost a few million liras to build a branch factory, and nearly half of the investment has been recovered in one and a half months.

Such a high return on investment is very successful, and the car factory is expected to become a cash cow for the Italian royal family, providing a large amount of income for the Italian royal family every year. More importantly, the car factory has also driven the development of other industries in Italy.

The establishment of branch factories is not as simple as an automobile factory, but also includes mechanical processing, rubber industry, petroleum industry, chemical industry and other industries.

Of course, the steel needed to produce cars can also accelerate the development of Italy’s heavy industry. For Italy, a small car factory has driven the development of many industries.

Although the driving force is limited, as long as the sales of automobile manufacturers do not fall off a cliff, this promotion to other industries will continue to exist.

In the long run, Italy’s industry can be effectively improved. It can not only make money but also promote the development of the country. For Umberto I, this is simply a good deal.

The automobile industry promoted the growth of other industries, which was why Benz left the Russian market for his own development.

In addition to cultivating their own country’s markets, these branches will also penetrate the markets of neighboring non-power countries.

Especially countries like the Netherlands and Belgium, although their comprehensive national strength is not strong, their overall industry and economy are still relatively good.

A lot of cars can be sold in these countries, which is real financial income.

It can be expected that the automobile factories of Britain, France and Germany will engage in fierce competition in the low-lying areas.

Although the size of the Netherlands and Belgium alone is not very large, their combined population is close to 10 million.

This is not a small market. The sales volume of cars in the Lowlands is at least tens of thousands, which translates into a net income of millions of pounds.

A million pounds might not seem like a lot, but it was enough money to build two ironclads.

The two ironclad ships are a great temptation to any of the countries including Britain, France and Germany. In the future, competition for the Lowland region market is bound to be quite fierce.

There is similar market competition in Denmark, Sweden, Norway, the United Kingdom and Romania.

These small countries can contribute at least thousands of vehicles in revenue, which is a real achievement for any automobile factory.

The good news is that because Portugal has only Spain as its land neighbor, there is almost no competitor in the Portuguese automobile market for Spain.

The only possible competition would be with the British automobile factory. After all, the relationship between Portugal and Britain was still relatively good at that time.

This is also the reason why the British automobile branch was established last. In order to prevent the British from seizing the market after the establishment of the automobile branch, Carlo ordered the development of the Portuguese automobile market as early as the beginning of this year.

The good news is that Portugal’s automobile market is developing quite smoothly.

Thanks to the railway connections between the two countries, Spain shipped thousands of cars to Portugal, which were sold out after a few months of sales.

As in Italy, cars became popular among the nobles in Portugal. Owning a car was not something to be proud of, but if a Portuguese noble did not even have a car, he would definitely be laughed at by the nobles.

In addition, cars were faster and more comfortable than horse-drawn carriages, which led to cars being quickly accepted by European nobles and quickly replacing horse-drawn carriages as the most popular means of transportation.

The Spanish automobile factory controls the three major markets of Spain, Portugal and Russia. In addition, because it is the origin of the automobile, it is far ahead of other automobile factories in terms of sales.

By late June 1882, the Spanish Automobile Factory had sold more than 6 cars, with total sales of more than 5000 million pesetas and a net profit of 6000 million pesetas.

If car production were not restricted, the number of cars sold would be even greater.

It can also be seen from this sales data that Royal Mercedes-Benz has officially become a cash cow for the Spanish royal family, and its money-making speed is no worse than that of the Royal United Bank and the National Bank.

After more than ten years of development, the Royal Bank of Spain currently earns only tens of millions of pesetas for the royal family each year.

This is because of the large number of companies invested in. The income generated by the bank itself is not as much as that earned by Royal Mercedes-Benz. After all, Spain’s own financial market is limited.

The limited financial market not only has the giant Royal United Bank, but also the National Bank, which is second only to the Royal United Bank.

Two large official banks monopolize the banking industry in Spain, and other private banks can only pick up leftovers from the two major official banks.

Of the 1500 million pesetas earned by Royal Mercedes-Benz, 500 million was reinvested in research and development in the automotive industry.

The remaining 1000 million pesetas were transferred to the Royal United Bank for investment.

As the number of cars in the world increases, the prices of rubber and oil will continue to rise.

Before the car was released, Royal United Bank made certain investments in the rubber and oil industries in order to seize the opportunity and make a fortune in these two industries.

Speaking of oil fields, this also reminded Carlo of the privilege of colonizing Oman that he had obtained during the previous colonial exchange with Britain.

As one of the Middle Eastern countries, Oman certainly has oil fields.

However, the bad news is that if oil fields are discovered in Oman, it is likely to attract great attention from the British. If the British discover large oil fields in the Middle East, it will be difficult for Spain to hold on to Oman.

It is for this reason that even though Spain had obtained permission from Britain to launch a colonial war against Oman, Carlo had no plans in this regard.

It is necessary to conquer Oman, but even if Oman is conquered, Carlo will not explore oil fields in Oman on a large scale.

Anyway, the current oil price is not expensive, and the demand for oil is not too great. Spain can explore small oil fields in existing colonies or import oil from other European countries. Anyway, it is not too expensive.

Only when Spain had sufficient military strength to ensure that it could defend Oman even with British interference would Carlo consider exploring and exploiting Oman’s oil fields.

Before that, if there is hope to expand into the Middle East, Carlo will also take certain actions.

Before oil was discovered in the Middle East and before the price of oil went up, this land of only desert in the Middle East did not actually have much value.

The economic value of the entire Middle East peninsula south of the Mesopotamian Plain is not as large as that of Cuba.

This is not an exaggeration. This land is all desert, and its development value is basically zero.

It is because the geographical location of this land is quite important that the British had ideas about this land.

However, the British did not penetrate deep into the Middle East Peninsula. The main areas they developed were the coasts of the Middle East Peninsula, and they were concentrated in the southern part of the Middle East Peninsula and the coast of the Persian Gulf.

It is easy to understand why the British chose to colonize these two locations.

The southern part of the Middle East Peninsula is across the sea from the African continent, and it is also the outlet of the Red Sea.

The British controlled both sides of the Red Sea estuary, which provided a second line of defense. Even if European countries entered the Red Sea from the Mediterranean through the Suez Canal, they would be blocked by Britain at the Red Sea estuary.

To the north of the Persian Gulf coast is Persia, which is also a key area for the British to guard against Russia’s southward advance.

The reason why the British chose to colonize these two regions was not because of their economic value, but only because of their geographical location and strategic value.

(End of this chapter)