Chapter 609 - 290: Expansion of the Automotive Industry

It was several days after Prime Minister Prim’s funeral had concluded that Carlo finally gathered himself and devoted his energy to the affairs of Spain and the development of the royal family’s assets.

First, let’s talk about the development of automobiles.

Since the successful auto expo at the end of December last year, the Spanish Royal Mercedes-Benz Company has become a household name across Europe.

Through reports in various countries’ newspapers, a significant portion of the European public has learned that Spain invented a more efficient means of transportation than carriages, and this means of transportation is rapidly expanding across Europe.

Benz also didn’t miss this lucrative opportunity and had already planned the establishment of branch factories at the beginning of this year.

Considering the complexity of the European situation, Benz, after consulting with Carlo, transformed the original plan of establishing a few branch factories into establishing one in each of the major powers’ countries.

Firstly, there’s the transportation issue; cross-border transportation of automobiles involves expensive tariffs, coupled with some countries not having good relationships, which adds more difficulty to the cross-border selling of cars.

Secondly, there’s the issue of production capacity. Judging by the current rate of car sales, the entire European car market is still quite large.

Only by building more branch factories can we keep up with the pace of car sales. The more cars that sell, the more money the factories can make.

In January, the Royal Mercedes-Benz Company’s first branch factory 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.

Soon after, the automobile company’s branch factories in Austria-Hungary, the German Empire, and France were also established one after another, and production lines were quickly being set up.

The only major power country in Europe without a car branch factory is the Tsarist Russian Empire. Because Spain and Russia have trade cooperation, the tariffs between the two countries are relatively low.

Additionally, since there is always a limit to the Spanish car market, Benz decided that the Spanish headquarters would develop the Russian car market.

Although Russia has the largest population in Europe, only the nobility and a small number of capitalists can truly afford automobiles.

This is also why Benz is confident in tapping into the Russian market by himself, because the number of people in Russia who can afford cars is limited.

In April of this year, the earliest established Italy and Austria-Hungary branch factories had already set up their production lines, churning out brand new cars continuously.

In June, the same month when Garibaldi and Prime Minister Prim passed away one after another, all the branch factory production lines were assembled, producing cars continuously every day.

Although different branch factories have varying degrees of foreign capital involvement, the Royal Mercedes-Benz Company consistently holds 50% of the shares.

Although the cost of producing a car at these newly established factories is slightly higher, and labor costs differ from country to country.

But it is certain that outside of Spain and Russia, in other places, for each car sold, the Royal Mercedes-Benz Company earns at least 1,000 Pessetas of net income.

So the question arises, how are car sales performing across Europe?

Due to different setup times for each country’s car factories, the car sales situation in each country varies.

The relatively late-established United Kingdom branch is still in a stockpiling phase, only selling a small number of cars to British nobility and capitalists.

The earlier-established Italian branch has been selling cars for over a month now.

It is worth mentioning that due to the relationship between the Spanish and Italian royal families, the Italian Royal Family chose to invest in the branch factory, becoming the largest shareholder of the Italian Mercedes-Benz branch.

It turns out that Umberto I did indeed make the right choice.

Italian car sales have been ongoing for a month and a half, and have sold over 1,000 cars, averaging over 22 cars sold daily.

The Italian car branch is located in Northern Italy, which is also the most prosperous industrial region in Italy. Because of the industrial prosperity, the per capita income in Northern Italy is higher than in Southern Italy.

Consequently, the branch factory also pays higher wages to recruited employees, naturally increasing labor costs.

Based on the actual situation of the Italian branch, producing one car costs about 13,800 Pessetas.

This is 1,200 Pessetas higher than the car production cost at the Spanish headquarters, nearly halving the profit.

Therefore, the car price in Italy is higher than in Spain. Given the car cost of 13,800 Pessetas, the final price of a car in Italy reaches 17,000 Pessetas, which is a full 2,000 Pessetas higher than the car price in Spain.

However, it’s clear that the increased price of 2,000 Pessetas does not significantly affect car sales in Italy.

After all, this means of transportation is not affordable for ordinary people, and for nobility and capitalists, the additional 2,000 Pessetas is not a significant concern.

Before the Italian branch was constructed, Carlo gifted 10 cars to the Italian Royal Family as a gesture of goodwill.

After Umberto I personally experienced the convenience and comfort of the car, he became enamored with this new means of transportation.

He chose to travel by car for every outing, which ultimately led to his decision to cooperate with Spain in constructing the branch, because Umberto I genuinely appreciated the convenience brought about by the automobile.