Chapter 292: The Expansion of the Automobile Industry

It was not until several days after the funeral of Prime Minister Primo that Carlos regained his composure and devoted his energy to the administration of Spain and the development of the royal family's assets.

Let us first discuss the development of automobiles.

Since the successful holding of the automobile exhibition at the end of last December, the Spanish Royal Benz Automobile Company has become a household name throughout Europe.

Through reports in various national newspapers, a considerable portion of the European public has learned that Spain has invented a means of transportation more efficient than horse-drawn carriages, and that this vehicle is rapidly being introduced across Europe.

Benz did not let this golden opportunity to make a fortune slip by, and had already planned the construction of branch factories at the beginning of this year.

Considering the complexity of the European situation, after consulting with Carlos, Benz changed the original plan of building a small number of branch factories to establishing one in every major power.

First is the issue of transportation; cross-border transport of automobiles involves expensive tariffs, and coupled with the fact that relations between certain countries are not so good, this adds further difficulty to the cross-border sale of automobiles.

Secondly, there is the issue of production volume. Judging by the current sales speed of automobiles, the entire European automobile market is still very large.

Only by building more branch factories can one keep up with the sales speed of automobiles, and only by selling more automobiles can the automobile factories earn more money.

In January, the first branch factory of the Royal Benz Automobile Company was established in Italy.

Benefiting from the good relations between Spain and Italy, Benz also chose Italy as the first partner for the automobile company.

Immediately following this, branch factories of the automobile company were established one after another in the Austro-Hungarian Empire, the German Empire, and France, and production lines were also being assembled rapidly.

The only major European power without an automobile branch factory is the Russian Empire. Because Spain and Russia have trade cooperation, the tariffs between the two countries are relatively low.

Furthermore, since the Spanish automobile market will always have a ceiling, Benz decided to have the Spanish headquarters develop the Russian automobile market.

Do not look at the fact that Russia has the largest population in Europe; those in Russia who can truly afford an automobile are only those nobles and a small number of capitalists.

This is also the reason why Benz is confident in developing the Russian market on his own, because the number of people in Russia who can afford an automobile is limited.

In April of this year, the earliest established Italian branch factory and the Austro-Hungarian branch factory had already assembled their production lines and began to produce brand-new automobiles one after another in a steady stream.

In June, the month when Garibaldi and Prime Minister Primo passed away one after another, all branch factory production lines had been completed, and they were producing automobiles in a steady stream every day.

Although different branch factories have different foreign capital participation, the fact that the Royal Benz Automobile Company holds half of the shares remains unchanged.

Although the cost of producing an automobile in these newly established factories is slightly higher, and the labor costs in each country are also different.

But what is certain is that in places other than Spain and Russia, for every automobile sold on average, the Royal Benz Automobile Company can obtain a net profit of at least 1, 00 pesetas.

So the question arises, what are the automobile sales figures for various European countries?

Because the assembly times of automobile factories in various countries differ, the automobile sales situation in each country is also different.

The British branch factory, which was built relatively late, is currently still in a state of stockpiling, only selling a small number of automobiles to British nobles and capitalists.

As for the Italian branch factory, which was built earlier, automobile sales have already been underway for more than a month at this time.

It is worth mentioning that because of the relationship between the Spanish and Italian royal families, the Italian royal family chose to invest in the branch factory and became the largest shareholder of the Italian Benz automobile branch factory.

Facts have proven that Umberto I indeed did not choose wrong.

Automobile sales in Italy have been underway for a month and a half, and more than 1, 00 automobiles have been sold so far, with an average of over 22 automobiles sold per day.

The Italian automobile branch factory is located in Northern Italy, which is also the most prosperous industrial region in Italy. It is precisely because of the prosperity of industry that the per capita income in Northern Italy is higher than that in Southern Italy.

And precisely because of this, the wages of the employees recruited by the branch factory are also higher, and the labor costs naturally increase as well.

According to the actual situation of the Italian branch factory, for every automobile produced, the Italian branch factory has to pay a cost of approximately 13, 00 pesetas.

This is 1, 00 pesetas higher than the cost of an automobile at the Spanish main factory, and nearly half the profit less.

Precisely because of this, the selling price of automobiles in Italy is higher than the selling price of automobiles in Spain. Given the automobile cost of 13, 00 pesetas, the final selling price of Italian automobiles is as high as 17, 00 pesetas, a full 2, 00 pesetas higher than the selling price of Spanish automobiles.

However, it is obvious that the increased selling price of 2, 00 pesetas has not had much impact on the sales situation of Italian automobiles.

Automobiles as a means of transportation are not something that ordinary people can afford, and for nobles and capitalists, the extra 2, 00 pesetas in cost does not really count for much.

Long before the construction of the Italian branch factory, Carlos had gifted 10 automobiles to the Italian royal family as a gesture of friendship.

After Umberto I personally experienced the convenience and ease of the automobile, he also became inseparable from this new means of transportation.

Every time he traveled, he chose to ride in an automobile, which is also the reason why he finally chose to cooperate with the Spanish side to build a branch factory, because Umberto I had truly experienced the convenience brought by automobiles.

It is also precisely because of Umberto I's personal endorsement that this novel means of transportation, the automobile, became popular among the Italian nobility.

Although the nobles would not go so far as to use automobiles to show off their wealth or compete with one another, if anyone among the noble group did not even have an automobile, it would inevitably lead to others looking at them differently.

In the first month of automobile sales, these nobles contributed the majority of the sales volume.

Among the over a thousand automobiles currently sold in Italy, at least 700 were contributed by these nobles.

The nobles did not buy automobiles one or two at a time; they bought them in batches of at least three or four, or even more than ten.

Most nobles have large families and businesses, and not only are there many family members, but there are also trusted aides and attendants.

If they only bought a few automobiles, it would not be enough when they needed to use them. For the nobles, they do not mind stockpiling a few more automobiles.

According to the cost of building an automobile at the Italian branch factory and the final selling price of the automobile, an average net profit of 3, 00 pesetas can be obtained for every automobile sold.

Of course, since it is an Italian branch factory, the currency settlement must be in Italy's official currency, the Lira.

However, there is not much difference in the exchange rate between the Lira and the Peseta; 1 British Pound can be exchanged for 25 Lira, or for 26 Pesetas.

The Italian branch factory sold over a thousand automobiles in total, and the net profit earned reached as high as 3. million Lira.

According to the shares between the two sides, the Spanish Royal Benz Automobile Company can obtain half of it, which is 1. 5 million Lira, or approximately 1. 1 million Pesetas.

Judging by the current automobile sales situation in Italy, the Italian branch factory alone can provide the Royal Benz Automobile Company with a net income of over ten million Pesetas per year.

This is still because the current popularity of automobiles is not high. Once the automobile market expands to a certain scale, the income of the automobile factory will continue to rise steadily.

For Umberto I, who invested in the automobile branch factory, this investment of his was indeed a huge success.

Building a branch factory only cost a few million Lira, and currently, in a month and a half, nearly half of the investment has already been recouped.

Such an investment with an extremely high rate of return is very successful, and the automobile branch factory also has the hope of becoming a cash cow for the Italian royal family, providing a large amount of income for the Italian royal family every year.

More importantly, the automobile factory has also driven the development of other industries in Italy.

The establishment of a branch factory is not just as simple as one automobile factory; it also includes industries such as mechanical processing, the rubber industry, the petroleum industry, and the chemical industry.

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

Although the driving force is limited, as long as the sales situation of the automobile factory does not experience a cliff-like decline, this promotion of other industries will always exist.

In the long run, Italy's industry can obtain effective improvement. Being able to earn money while also promoting the country's development, for Umberto I, this is simply a deal that could not be better.

The growth of other industries promoted by the automobile industry is also the reason why Benz left the Russian market for himself to develop.

In addition to cultivating the markets of their own countries, these branch factories will also infiltrate the markets of surrounding non-major power countries.

Especially countries like the Netherlands and Belgium; although the country's comprehensive strength is not powerful, the overall industry and economy are still relatively good.

Automobiles can also sell quite well in these countries, and this is all solid capital income.

It can be expected that the automobile branch factories of Britain, France, and Germany will engage in fierce competition in the Low Countries.

Although the size of the Netherlands and Belgium is not very large if taken individually, the two combined make a country with a population of nearly ten million.

This is no longer a small market; the sales volume of automobiles in the Low Countries will at least reach tens of thousands, which, when converted, is a net income of millions of British Pounds.

Millions of British Pounds may not seem like much, but this money is enough to build two ironclad warships.

Two ironclad warships are a considerable temptation for any country among Britain, France, and Germany; in the future, the competition for the market in the Low Countries is also destined to be quite fierce.

Similar competition exists for the markets of Denmark, the United Kingdoms of Sweden and Norway, and Romania, among others.

These small countries can at least contribute the income of thousands of automobiles, which, for any automobile branch factory, is a solid achievement.

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

The only one that might compete is the British automobile branch factory; after all, the relationship between Portugal and Britain is still relatively good at this time.

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

The good news is that the development of the Portuguese automobile market went quite smoothly.

Benefiting from the already connected railways between the two countries, Spain transported over a thousand automobiles to Portugal, which were sold out after several months of sales.

Like the situation in Italy, automobiles also became popular among the Portuguese noble group. Owning an automobile is not something worth showing off for a noble, but if a Portuguese noble does not even have an automobile, this noble would certainly be ridiculed among the noble group.

Coupled with the fact that automobiles are indeed faster than horse-drawn carriages and more comfortable to ride in, this led to automobiles being quickly accepted by European nobles and rapidly replacing horse-drawn carriages as the most popular means of transportation.

The Spanish automobile main factory holds the three major markets of Spain, Portugal, and Russia, and because it is the place of origin of the automobile, it is far ahead of other automobile branch factories in terms of sales.

By late June 1882, the Spanish automobile main factory had sold a total of over 5, 00 automobiles, with a total sales volume of over 60 million Pesetas and a net profit of 15 million Pesetas.

If it were not for the fact that automobile production was limited, the number of automobiles sold would only be higher.

From this sales data, it can also be seen that the Royal Benz Automobile Company has officially become a cash cow for the Spanish royal family, and the speed of earning money is by no means inferior to the Royal Union Bank and the National Bank.

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

This is still because of the investment in a large number of enterprises. The income generated by the bank itself is not as much as the money earned by the Royal Benz Automobile Company; after all, the financial market of Spain itself is also limited.

The limited financial market not only has the behemoth that is the Royal Union Bank, but also the National Bank, which is second only to the Royal Union Bank.

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

Of the 15 million Pesetas in income earned by the Royal Benz Automobile Company, 5 million was reinvested into the research and development of the automobile industry.

The remaining 10 million Pesetas was transferred to the Royal Union Bank for investment.

With the increase in the world's automobile ownership, the prices of rubber and petroleum will also continue to climb.

Before automobiles were sold, the Royal Union Bank had already made certain investments in the rubber industry and the petroleum industry, precisely to seize the opportunity and make a big profit in these two industries.

Speaking of oil fields, this also reminded Carlos of the privilege to colonize Oman that he had obtained when he exchanged colonies with the British earlier.

As one of the Middle Eastern countries, there are of course oil fields on the land of Oman.

However, the bad news is that if oil fields are discovered in the Oman region, it is very likely to attract the high attention of the British. If the British were allowed to discover large oil fields in the Middle East, it would not be easy for Spain to hold onto Oman.

It is precisely because of this that even though Spain has obtained permission from the British to launch a colonial war against Oman, Carlos has no plans in this regard.

Conquering Oman is very necessary, but even if Oman is conquered, Carlos will not conduct large-scale oil field exploration in Oman.

Anyway, the current price of petroleum is not expensive, and the demand for petroleum is not too great. Spain can completely explore those small oil fields in existing colonies, or import petroleum from other European countries; anyway, it is not a very large expense.

Only when Spain possesses sufficient military strength to ensure that it can hold onto Oman under British interference will Carlos consider exploring and extracting oil fields in Oman.

Before that, if there is hope for expanding into Middle Eastern lands, Carlos will also take certain actions.

Before the oil in the Middle East is discovered, and before the price of oil rises, this land in the Middle East, which only has deserts, actually does not have much value.

The economic value of the entire Middle Eastern peninsula south of the Mesopotamian plain does not even add up to that of Cuba.

This is no exaggeration. This land is entirely desert, and its development value is basically zero.

It is only because the geographical location of this land is somewhat important that the British have taken an interest in it.

However, the British have not ventured deep into the Alabobandao; they mainly develop the coastal areas of the Alabobandao, concentrating on the southern part of the Alabobandao 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 Alabobandao faces the African continent across the sea, and this is also the outlet of the Red Sea.

By controlling both sides of the Red Sea outlet, the British can form a second line of defense. Even if European countries enter the Red Sea from the Mediterranean via the Suyishiyunhe, they would still be blocked by the British at the Red Sea outlet.

To the north of the Persian Gulf coast lies Persia, which is also a key area where the British guard against Russia moving south.

The reason the British chose to colonize these two regions was not for their economic value, but solely for their geographical location and strategic value.

(End of chapter)