Chapter 292: The Expansion of the Automotive Industry

Several days after the funeral of Prime Minister Primo had concluded, Gao Da finally regained his composure and poured his energy into the governance of Spain and the development of the Royal Family's assets.

Let us first discuss the development of the automobile.

Since the successful hosting of the automobile expo at the end of last December, the Spanish Royal Benz Automobile Company had become a household name throughout Europe.

Through reports in newspapers across various nations, a significant portion of the European public had learned that Spain had invented a means of transportation more efficient than horse-drawn carriages, and that this vehicle was rapidly being introduced to all of Europe.

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

Considering the complexity of the European situation, Benz, after consulting with Gao Da, changed the original plan of establishing a few branch factories into establishing one branch factory in every Great Power nation.

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

Second is the issue of production volume. According to 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; only by selling more automobiles can the automobile factory 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 European Great Power nation without an automobile branch factory was the Russian Empire. Because Spain and Russia have trade cooperation, the tariffs between the two countries are relatively low.

Coupled with the fact that 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 to buy an automobile are only those nobles and a small number of capitalists.

This is also the reason why Benz has the confidence to develop the Russian market on his own, because the number of people in Russia who can afford to buy an automobile is limited.

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

In June, which was the month when Garibaldi and Prime Minister Primo passed away one after another, all branch factory production lines had been assembled, 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 automobile factories will be slightly higher, coupled with the fact that labor costs in various countries 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 income of at least 1,000 Pesetas.

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

Because the assembly time of automobile factories in various countries is different, 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 automobiles in small quantities to British nobles and capitalists.

As for the Italian branch factory, which was built earlier, automobile sales have already been going on 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 wrongly.

Automobile sales in Italy have been going on for a month and a half, and currently, more than 1,000 automobiles have been sold, with an average of more than 22 automobiles sold per day.

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

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

According to the actual situation of the Italian branch factory, for every automobile produced by the Italian branch factory, a cost of approximately 13,800 Pesetas must be paid in total.

This is 1,200 Pesetas higher than the automobile cost of the Spanish headquarters, and nearly half the profit is 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 13,800 Pesetas, the final selling price of Italian automobiles is as high as 17,000 Pesetas, which is a full 2,000 Pesetas higher than the selling price of Spanish automobiles.

However, it is obvious that the increased selling price of 2,000 Pesetas did not have much impact on the sales situation of Italian automobiles.

In itself, this means of transportation, the automobile, is not something that ordinary people can afford to enjoy; for nobles and capitalists, that extra 2,000 Pesetas in cost is not worth mentioning.

As early as before the construction of the Italian branch factory, Gao Da 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 fond of 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 the automobile.

And precisely because of Umberto I's personal promotion, this novel means of transportation, the automobile, became popular among Italian nobles.

Although nobles would not use automobiles to show off their wealth and compete with each other, if anyone among the noble group did not even have an automobile, it would inevitably be looked at differently by others.

In the first month of automobile sales, these nobles contributed more than half of the sales volume.

Among the thousands of automobiles sold in Italy currently, at least 700 automobiles were contributed by these nobles.

Nobles do not buy automobiles one or two at a time at all; they buy them in ways of at least three or four, or even more than ten.

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

If they only bought a few automobiles, it would not be enough when they needed to use them. For 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, a net income of 3,200 Pesetas can be obtained for every automobile sold on average.

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 Pound can be exchanged for 25 Lira, and can also be exchanged for 26 Pesetas.

The Italian branch factory sold a total of thousands of automobiles, and the net profit earned was as high as 3.1 million Lira.

According to the shares between the two sides, the Spanish Royal Benz Automobile Company can obtain half of it, which is 1.55 million Lira, or approximately 1.61 million Pesetas.

According to the current automobile sales situation in Italy, just one Italian branch factory can provide the Royal Benz Automobile Company with a net income of tens of millions of Pesetas every year.

This is still because the current popularity of automobiles is not high. When the automobile market expands to a certain scale, the income of the automobile factory will continue to increase in a steady stream.

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

It only cost a few million Lira to build a branch factory, and currently, in a month and a half, nearly half of the cost has been recovered.

Such an investment with a 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 as simple as just 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. It can both make money and promote the development of the country; 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.

These branch factories, in addition to cultivating the market of their own countries, will also infiltrate the markets of surrounding non-Great Power nations.

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

Automobiles can also be sold in large numbers in these countries, and this is all solid capital income.

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

Although the volume of the Netherlands and Belgium taken individually is not too large, the two combined are also countries with a population of nearly ten million.

This is no longer a small market; the sales volume of automobiles in the Low Countries will be at least tens of thousands, and if converted, that is a net income of millions of Pounds.

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

Two ironclad warships are no small 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 to this is the market competition for Denmark, the United Kingdom of Sweden and Norway, and Romania, among other countries.

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

The good news is that because Portugal only has Spain as its only 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, at this time, the relationship between Portugal and Britain is still relatively good.

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, Gao Da ordered the development of the Portuguese automobile market.

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

Benefiting from the railway that has already connected the two countries, Spain transported thousands of automobiles to Portugal, and after several months of sales, they have already been sold out.

Like the situation in Italy, automobiles have also become popular among the noble group in Portugal. 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 will definitely 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 headquarters 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 in sales, far leading other automobile branch factories.

By the end of June 1882, the Spanish automobile headquarters had sold more than 5,000 automobiles in total, with a total sales volume as high as more than 60 million Pesetas, and a net profit of 15 million Pesetas.

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

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 making money is not inferior to the Royal Union Bank and the National Bank at all.

After more than ten years of development, the Spanish Royal Bank currently earns no more than tens of millions of Pesetas for the royal family every year.

This is still because of the reason that a large number of enterprises have been invested in. The income generated by the bank itself is not as much as the money earned by the Royal Benz Automobile Company; after all, Spain's own financial market 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.

Two large official banks monopolize Spain's banking industry, and other private banks can only pick up some 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 the automobile was sold, the Royal Union Bank had already made certain investments in the rubber industry and the petroleum industry, precisely to seize the opportunity to make a big profit in these two industries.

Speaking of oil fields, this also reminded Gao Da of the privilege he obtained to colonize Oman when he exchanged colonies with Britain earlier.

As one of the Middle Eastern countries, there are of course oil fields on this 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 region, it would not be easy for Spain to hold onto Oman.

Precisely because of this, even though Spain had already obtained permission from the British to launch a colonial war against Oman, Gao Da did not have any relevant plans.

Conquering Oman is very necessary, but even if Oman is conquered, Gao Da will not conduct large-scale exploration of oil fields in Oman.

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

Only when Spain possesses sufficient military strength to ensure that it can hold onto Oman under the interference of the British, will Gao Da consider exploring and mining the oil fields in Oman.

Before that, if there is hope to expand the land in the Middle East, Gao Da will also take certain actions.

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

The economic value of the entire Middle Eastern peninsula south of the Mesopotamian plain combined is not as much as that of a single Cuba.

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

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

However, the British did not go deep into the Middle Eastern peninsula; the places they mainly developed were the coast of the Middle Eastern peninsula, and they were concentrated in the south of the Middle Eastern peninsula and the coast of the Persian Gulf.

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

The south of the Middle Eastern peninsula faces the African continent across the sea, and this is also the outlet of the Red Sea.

If the British controlled both sides of the Red Sea outlet, they could form a second insurance policy. Even if European countries entered the Red Sea from the Mediterranean through the Suez Canal, they would be blocked by the British at the Red Sea outlet.

The north of the Persian Gulf coast is Persia, and this is also a key area for the British to guard against the southward movement of Russia.

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

(End of chapter) ===== CHAPTER 293 =====