Holy Roman Empire

The creation of Royal One was not merely a luxury item, nor was it an extravagant endeavor crafted by subordinates to flatter the Emperor.

After all, it was a product of his own industry, and Franz himself would ultimately foot the bill. Without the personal permission of the Emperor himself, there would be responsibility to answer for.

There was no doubt that the Austrian Auto Group put forth its utmost effort to build this ultra-luxury sedan, and it certainly wasn't for showing off wealth.

Franz would never drive this car for leisure, and even information about the car would not be disclosed to the public.

The request for its creation, apart from advancing automotive technology, was more so a test of the domestic industrial strength.

As an Emperor bombarded with various kinds of information, Franz was well aware that data and reports could be fabricated out of thin air, but physical objects right before one's eyes couldn't be faked.

In those days, only Austria had a complete automotive industry, while other nations were still trailing behind, eating dust.

Even if someone wanted to fabricate the truth, there was no leeway to do so.

In respect for the Royal One, Franz even personally inspected the largest automobile production base of the Austrian Auto Group—Prague Automobile Factory, which at full capacity could produce 20,000 cars a year.

Such a number would not seem strange at all in later generations, easily attainable by any car factory.

However, this factory, which could average no more than about 55 cars per day, was already the world's largest car factory without peer.

In fact, the situation was even more exaggerated. This seemingly inconspicuous annual production capacity of 20,000 cars already accounted for one-third of Austria's entire automotive industry's output.

The production capacity of the Prague Automobile Factory alone surpassed the combined automotive output of England and France, and was equivalent to the capacity of all other countries excluding Austria.

Well, this was the result of Franz's headstart. At present, the only enterprise in the world capable of industrial automotive production was the unique Austrian Auto Group.

There was no helping it; an early start was an advantage. While everyone else was still not paying attention to the automotive industry, Franz had already started investing heavily.

From the onset, the Austrian Auto Group was deeply engrossed in research and development within its laboratories, without ever making news public, leaving their peers clueless.

No, more precisely, before their product came to market, there were no so-called peers at all.

Prior to this, everyone was focusing on the development of steam cars. Compared to Austrian Auto Group's internal combustion engine cars, they were completely different species.

In the original timeline, the earliest internal combustion engine car came to market in 1888; the pioneer who made history and was infamous in later generations, the founder of Mercedes-Benz, didn't even know what he was doing yet.

The earliest American car company, Oldsmobile, was established in 1897; and Japan's earliest car company, Cadillac, was not registered until 1902.

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It wasn't until after the Austrian Auto Group's first product—"Beetle"—was launched and sold that everyone suddenly realized that cars could be built this way.

With no competitors, the Austrian Auto Group naturally led the way, instantly becoming the dominant force in the field of automobiles.

There was no doubt that, in a world where patent protection didn't cover every corner, imitators quickly emerged.

If one couldn't develop their own product in a short amount of time, what's to stop them from using a template to copy or pirate?

Then, the first batch of products from the Austrian Auto Group mostly became components, contributing to the development of the global automobile industry.

In essence, this was also just a conceptual breakthrough. As long as one opened their mind, any industrial powerhouse could manufacture automobiles.

However, automobiles aren't simply about assembly; possessing manufacturing technology doesn't guarantee the production of a vehicle that meets quality standards.

The collaboration of related industries is also necessary; any issue in any link can lead to a tragic result.

The followers soon realized this, but to expect them to develop technologies across multiple fields and overcome a series of challenges would be asking too much.

The immense capital investment required in the early stages alone isn't something that most companies and individuals can bear.

After all, the automobile market was quite limited at the time, and financial consortia didn't care for such small change in profits.

What capital likes best is to wait until the fruit is almost ripe and then simply pluck it, rather than to plant the tree themselves.

The physical giants, on the other hand, were usually constrained by business philosophies, focusing mainly on their own fields; even if they expanded, it would be into related industries.

This was a lesson learned from countless classic cases: rashly entering an unfamiliar field usually results in failure, with the chances of failure much higher than those of success.

Before being able to predict risks, most people would choose to wait and see. Of course, the more important reason was the lack of money in their pockets.

The domestic automobile market had only just begun, and its future was still unclear; no one could guarantee that today's internal combustion engine cars wouldn't become yesterday's steam cars.

The automobile industry was in the money-burning stage, akin to a freshly planted sapling, with blooming and fruit-bearing still far in the future.
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Then, naturally, it was handcrafted work. The difficulty of mass industrial production was too high; even copying required industrial support, which couldn't be achieved overnight.

By comparison, handcrafting was much simpler. If the precision of parts wasn't sufficient, manual polishing would suffice. If the engine lacked power, the number of cylinders would be increased.

The main competitors on the market for the Austrian Auto Group right now were a bunch of handcrafted workshops.

Because automobiles had only been introduced shortly before and were still considered luxury high-end products with high pricing, even though the production costs for handcrafted workshops were higher, they too could gain considerable profits.

After straightening all this out, Franz furrowed his brows.

It was clear that many in the Austrian Auto Group were dazzled by current achievements, overlooking the presence of competitors.

Since the introduction of the products in 1882, the market share of the Austrian Auto Group had been decreasing year by year.

A decline in market share was inevitable unless the market was completely monopolized; with the continuous entry of competitors, the market share was bound to decrease.

However, the rate at which the Austrian Auto Group's market share decreased was too fast, falling nearly a quarter in just three years.

This was their own industry; standing still meant losing their own interests, which Franz found absolutely intolerable.

"Oprea, haven't you thought about creating a budget model to maintain market share?"

Franz no longer harbored any hopes of expanding market share.

After all, the Austrian Auto Group occupied 76.4 percent of the automobile sales market share; how could it increase even more?

But making an effort to keep market share as much as possible, or to slow the decline in market share, was feasible.

Oprea hastily explained, "Your Majesty, releasing a budget car would not only reduce our corporate profits but also damage our automotive brand value."

The models currently promoted by the group, such as Beetle, Walker, and Brady, are all luxury cars.

Although lowering prices can gain a larger market share in a short time, the automobile was destined to be a luxury item from its inception.

No matter how much we reduce the price, ordinary people won't be able to afford it. Right now, we are trying to make cars a symbol of status and identity, so maintaining the brand value of our automobiles is very important."

Being aware of "brand value," Oprea is certainly no ordinary player.

However, limited by the times, he still hadn't realized that cars might become common in every household, falling from luxury items to basic transportation tools.

Given the current global automobile consumption market of only tens of thousands of vehicles per year, Oprea's decision to forgo the development of low-end models and focus on high-end brand operation still conforms to reality.

Franz shook his head, "No, there is still much room for reduction in the cost of producing cars. In the future, it's not impossible for prices to drop to a range that ordinary people can afford.

In the short term, under the existing technology system, we can all reduce costs to within the range affordable by the middle class.

If we continue to expand production capacity, the current cost of production will continue to decrease.

Perhaps the sales of individual cars have declined, but the number of middle class is much greater than that of the rich, so our total profit will only be higher.

Moreover, lowering the sales price of cars can also hit our competitors. Unlike us, their small workshops simply cannot bring down the cost of production.

As for the issue of brand value, that's even simpler. Register a new company and use the name of the new company to launch a different brand that targets low-priced cars."

The production cost of cars is generally between 400 and 700 Divine Shield, and the market selling price is basically above 1000 Divine Shield; the price of luxury versions of cars is easily over ten thousand.

This high gross profit still cannot cover the fact that the Austrian Auto Group is operating at a loss.

The main issue is the high investment in research and development and the consistently high maintenance costs, which are the reasons for the company's long-term deficit.

Oprea's focus on corporate profit is also out of necessity. The company's finances aren't great; he can't be asking the boss for money all the time, can he?

Were it not for Franz's strict orders, Oprea would probably slash the R&D budget and go all-in on car sales.

After all, in the short term, sales-oriented enterprises are more profitable than research and development-oriented ones. Only when the company makes money can everyone receive a richer reward.

With the current state of losses, it is better to take some bonuses. Stock options are not yet popular, but profit sharing has already emerged.

However, a research and development-oriented company like the Austrian Auto Group, which has been operating at a loss for over a decade, simply cannot see any dividends.

But Oprea still has integrity and hasn't resorted to duplicity like some unethical publicly traded company executives who only focus on lining their own pockets without considering the company's long-term development.

Otherwise, if they were to switch concepts, it would be very simple for the Austrian Auto Group to turn losses into profits. Whether by reducing research and development investment or by slowing down the construction of service stations, profitability can be achieved.

If not for these two money pits dragging it down, the Austrian Auto Group would definitely be the most profitable company of the era, and one with wealth to rival nations.

Even if each car only earned a profit of 100 Divine Shield, the Austrian Auto Group would still have an annual net income of five or six million Divine Shield.

In reality, it would be even more, as not all the cars sold are the least profitable standard models. Those luxury cars priced at tens of thousands are sold easily, netting several thousand Divine Shield with each sale.

Of course, the Austrian Auto Group's core competitiveness actually lies in technology and after-sales service.

They may lose money in the short term, but these are what will be most profitable in the future. Once the distribution channels are established, they will be without competitors for a very long period.

This could be seen within Austria itself, where in regions covered by the group's service network, the only cars that could be sold were those from Austrian Automotive.

Other manufacturers, limited by their own capabilities, simply lacked the strength to set up so many maintenance stations.

Once a car broke down, one could only find their own way to fix it, or wait for the manufacturer's technicians to arrive.

"Yes, Your Majesty!" Oprea responded.

After a pause, Oprea added, "Your Majesty, in order to improve corporate earnings, reverse the current state of losses, and increase competitiveness,

the management plans to cover gas stations as well when setting up logistical channels, to facilitate refueling for our users on the go."

If this were done in the future, antitrust laws would have intervened before it even began.

"Facilitating our users" was a clear indication of its exclusionary nature. Other cars could only look on helplessly at the gas stations.

But in the 19th century, the era of major monopolies, this was a common sight. Just as now, Austrian Auto Group's maintenance stations would not provide services to other brands' cars.

After pondering for a moment, Franz shook his head, "Gas stations are feasible, but we cannot be so extreme. This is different from maintenance points, and it's very easy to cause public discontent.

With the growing outcry against monopolies in society, it's only a matter of time before countries enact antitrust laws. Leaving such an obvious flaw now makes it easy to be targeted in the future.

In this respect, you must pay close attention. Even if we want to increase competitiveness, we can adopt more covert methods.

For example: membership card services.

Those who purchase vehicles from our group can enjoy membership services and receive a certain discount at gas stations.

Other customers who wish to enjoy fuel discounts can pay to purchase a membership card.

We can issue various types of membership cards, preferably different in each city, where a membership card can only enjoy discounts in one region.

Any excuse will do, as long as it's plausible on the surface and people can reluctantly accept it."

Austrian Auto Group's maintenance points refusing to service other cars had sufficient reasons to excuse.

For example: lacking the matching spare parts, unable to carry out repairs; or claiming the mechanics hadn't encountered this type of car before, not knowing how to handle it.

Gas stations were different, as everyone used the same fuel, and there was no issue with incompatibility.

If service were denied, car owners would surely make a fuss. Such an antagonizing move was something Franz would naturally not engage in.

By contrast, membership services were much more acceptable to everyone. As long as it wasn't promoted overtly, ordinary people couldn't understand the complex relationships between businesses.

Changing the facade, disconnecting the gas stations from direct association with the auto group. The automotive group could also pay an annual membership fee to the gas stations, leaving no room for criticism.

Anyway, in those days without networking technology, membership cards couldn't be recognized nationwide, and it could be excused as an identification issue or claimed that gas stations operated independently in different regions.

Cards might not be recognized, but the car could be. If all car manufacturers were willing to pay membership fees, Franz wouldn't mind everyone enjoying a discount together.

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