Chapter 610 - 290: Expansion of the Automobile Industry (Part 2)

It was precisely because of Umberto I’s direct endorsement that automobiles, this novel mode of transportation, became popular among the Italian nobility.

Although the nobility didn’t exactly use automobiles to flaunt their wealth and compete with each other, anyone within this group without a car was bound to be viewed differently.

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

Out of the over a thousand cars sold in Italy thus far, at least 700 were purchased by these nobles.

The nobles did not buy cars just in ones and twos; they typically purchased at least three or four, or even more than ten.

Most nobles had extensive families and vast estates; not only were there numerous family members, there were also confidants and attendants.

Buying only a few cars would be completely insufficient when vehicles are needed. For the nobles, they didn’t mind stockpiling a few more cars.

According to the cost of constructing a car in the Italian branch factory and the final selling price, each car sold could yield an average net profit of 3,200 Pessetas.

Of course, since it is an Italian branch factory, currency settlements are surely in Italy’s official currency, the Lira.

However, the exchange rate between the Lira and the Pesseta was not significantly different; 1 Pound could be exchanged for 25 Lira, as well as for 26 Pessetas.

The Italian branch factory sold over a thousand cars, earning a net profit of up to 3.1 million Lira.

Based on the shares held by each party, the Spanish Royal Mercedes-Benz Company could obtain half of that, amounting to 1.55 million Lira, or approximately 1.61 million Pessetas.

Judging by the current car sales situation in Italy, just a single Italian branch factory could provide the Royal Mercedes-Benz Company with an annual net income of over ten million Pessetas.

This was due to the limited current spread of automobiles. Once the car market expands to a certain scale, the income of the car factory will continue to grow steadily.

For Umberto I, who invested in the automobile branch factory, this investment has indeed been greatly profitable.

Constructing a branch factory cost only a few million Lira, and within just a month and a half, nearly half of that investment had already been recouped.

Such a high-return investment was incredibly successful, and the automobile branch factory held potential to become a cash cow for the Italian Royal Family, providing a substantial income annually.

More importantly, the car factory also stimulated the development of other Italian industries.

The establishment of the branch factory was more than just a car factory and included sectors like mechanical processing, the rubber industry, the oil industry, and the chemical industry.

Of course, the steel needed for car production also accelerated the development of Italy’s heavy industry. For Italy, a small car factory spurred the growth of many industries.

Although the impact was limited, as long as the car factory’s sales did not experience a cliff-like decline, this boost to other industries would continue to exist.

In the long run, Italy’s industry could achieve effective enhancements. Being able to earn money while also promoting the country’s development, for Umberto I, this transaction couldn’t be more advantageous.

The growth of other industries promoted by the automotive sector was also why Benz left the Russian market open for its own development.

Aside from cultivating their domestic markets, these branch factories also infiltrated the markets of neighboring non-major powers.

Particularly in countries like the Netherlands and Belgium, although their overall national strength wasn’t formidable, their industrial and economic status was relatively good.

Cars could also be sold extensively in these countries, bringing in significant profits.

It is foreseeable that the car branch factories of the UK, France, and Germany will engage in fierce competition in the Lowland Region.

Although the Netherlands and Belgium are not particularly large when considered individually, together they have a population nearing ten million.

This is not considered a small market, and car sales in the Lowland Region could easily reach tens of thousands, translating into over a million Pounds of net income.

A million Pounds may not seem much, but this amount is sufficient to build two ironclad ships.

Two ironclad ships would be a significant temptation for any one of the UK, France, or Germany; in the future, competition over the Lowland Region market was bound to be extremely intense.

Similar competition was also evident in the markets of Denmark, the United Kingdom of Sweden and Norway, and Romania.

These smaller countries could each contribute revenues from a thousand car sales, which were tangible achievements for any car branch factory.

The good news was that, due to Portugal’s only land neighbor being Spain, the car market in Portugal was almost devoid of competitors for Spain.

The only potential competitor might be the UK’s car branch factory, especially since relations between Portugal and the United Kingdom were relatively good at this time.

This was also why the UK’s car branch factory was the last to be established. To prevent the British from capturing the market after setting up their factory, Carlo had already ordered the expansion of the Portuguese car market early this year.

The good news was that the expansion of the Portuguese car market went quite smoothly.

Thanks to the already connected railway between the two countries, Spain transported over a thousand cars to Portugal, which sold out after several months.

As in Italy, cars became fashionable among the Portuguese nobility. Owning a car wasn’t seen as something worth boasting about among the nobles, but if a Portuguese nobleman didn’t even have one, he would certainly be ridiculed among the noble community.