The history of Mercedes-Benz includes over a century of constant innovation in the face of adversity. Produced by Daimler AG, the Mercedes name has seen some of the darkest times in European history followed by some of the most innovative years in science and technology.
The following article traces the history of Mercedes Benz from its innovative foundations through the trials of the World Wars and then into the prosperity of the 1950s and 1960s. The story of Mercedes-Benz is a history lesson that teaches perseverance, respect and, above all, the value of striving for continuous advancement in every area possible.
In this article, you will learn about 1) the founders of Mercedes Benz (Gottlieb Daimler and Karl Benz), 2) Daimler Benz in WW2, 3) Daimler after the second world war, 4) the worldwide expansion of Daimler Benz, and 5) some interesting facts about its technology.
GOTTLIEB DAIMLER AND KARL BENZ
Though they had never met, Gottlieb Daimler and Karl Benz each invented a high-speed engine in the 1880s. Gottlieb Daimler worked with his business partner, Wilhelm Maybach, to design what was to evolve into a modern gasoline engine in 1885. Around the same time in 1885, Karl Benz utilized bicycle technology and a four-stroke engine to begin the development of one of the first automobiles.
After years of struggle with unstable business partners and demanding bank regulations, Karl Benz founded Benz & Co Rheinische Gasmotoren-Fabrik in 1883. His company was often referred to as Benz & Cie, and it was one of the first two automobile manufacturers established in Germany. Karl Benz was awarded a patent for his three-wheeled self-propelled ‘Motorwagen’ in 1886. German patent #37435 changed transportation forever. Karl’s wife, Bertha, was an active part of many of his businesses after she bought out his former partner’s shares with her dowry. Bertha continued to help promote Karl’s inventions by taking his newly patented vehicle on an impromptu 120-mile trip. She was so involved in Karl’s business life that she knew the machine well enough to maintain it herself.
Daimler-Motoren-Gesellschaft (DMG) was founded in 1890 by lifelong business partners Gottlieb Daimler and Wilhelm Maybach. The pair had invented a combustion engine in 1885 and the following year were successfully able to attach it to a motorcycle, a boat, and a stagecoach. Their engine was not only smaller than the previous engines, but it was also more powerful. After having achieved success with their early internal combustion engines, they were able to begin selling automobiles as early as 1892. Despite their success, Daimler and Maybach resigned from the business after experiencing difficulty with their shareholders. They both returned the organization in 1894. In 1900, Gottlieb Daimler passed away and left Maybach to run DMG. Maybach left DMG for the final time in 1907.
Both companies continued operations during and after the First World War. However, they were both deeply affected by the German economic crisis that followed the Treaty of Versailles. During the war, most civilian development had come to a complete standstill as industry focused on creating armaments for the Prussian army. These local economic issues combined with the rise of motor companies overseas made business difficult for both Benz & Cie and DMG. Germany’s first two automotive companies entered an agreement to protect their mutual interests in 1924. This agreement was to be valid until the turn of the next century, the year 2000. However, the two companies decided to complete a total merger in the year 1926, and Daimler-Benz was born. The new company christened their joint automobile project the Mercedes-Benz.
DAIMLER-BENZ IN WORLD WAR II
Like many companies, Daimler-Benz produced armament items at the behest of the government during World War II. After the invasion of Poland sparked hostilities across Europe, many of the Nazi ministries took hold of most of the German industrial facilities to begin to prepare for what they thought would be a very short war.
Daimler-Benz began creating trucks and aircraft engines for the German military in 1936.Their current production facilities were not large enough to keep up with demand. Hence, a new plant was built in a hidden location near Berlin in the same year. Like the Nazis, the chief of the board of management at Daimler-Benz assumed that the war would be short and that the company would be able to resume producing civilian automobiles quickly. By 1941, the company began to realize that the war was going to be a long one. The production of civilian cars in Daimler-Benz production facilities virtually stopped by 1942.
As production demands increased, Daimler-Benz began to hire women to work in their plants. These women were recruited to take the place of the men who were being called to the front in high numbers. Soon, even the women could not keep up with the rising demands of production. Daimler-Benz then employed the use of forced laborers from Western Europe. These laborers included prisoners of war who had been captured and transported from the front as well as civilians who had been abducted from towns and villages. Daimler-Benz also used the prisoners of concentration camps that had been built near to their production plants. The company never denied that the people who worked in their factories during the war were treated inhumanely. Prisoners of war lived in prison conditions and were housed in barracks. Germany had ratified the Geneva Convention in 1929 and had agreed to accept a certain level of humanitarian treatment for prisoners of war. This treatment was more often than not reserved from Allied prisoners of war. Laborers who were sent from concentration camps were monitored by the SS in Daimler-Benz’s facilities, and they were given to Daimler-Benz in exchange for money.
After the war was over, Daimler-Benz did not hide its links with the Nazis and the area concentration camps. The company became actively involved in the ‘Remembrance, Responsibility and Future’ initiative created by the German Industry Foundation in 2000.
AFTER THE WAR
The Potsdam Agreement of 1945 required the demilitarization of the German state. This included Germany returning to its pre-war borders. It also required the breakdown of all military operations as well as the payment of reparations for damages. Industry that had been requisitioned by the Nazis was included in the demilitarization process because they had produced armaments during the war.
Daimler-Benz was one of many industries that was deconstructed after the end of the war. As a part of the Potsdam Agreement, all of their overseas assets were confiscated. These assets were then sold to begin to pay Germany’s share of the post-war reparations. Daimler-Benz had built themselves a large international network during the interwar period that was then dismantled by the Allied partnership. After 1945, they found their company to be in the same place that it had been 20 years before at the end of World War II.
The denazification that took place after the war changed up the management at Daimler-Benz. Otto Hoppe, who had been forced out because of his marriage to a Jewish woman in 1942, was invited back to the board in 1945. The major Daimler-Benz plant was put to work as a repair center for Allied military vehicles. It took nearly a year to get permission from the Americans to begin to produce automobiles again. It took a further two years to restore the plant. Reconstruction of Daimler-Benz’s operational facilities was not fully complete until 1951, nearly 6 years after the end of the war.
Despite the slow initial movement, Daimler-Benz began to resume production at all of its German plants by the year 1947. Two of the plants continued to produce trucks. Two other facilities saw their production areas totally destroyed and had to be rebuilt. Despite their total deconstruction after the war and the financial difficulties that could only be resolved by currency reform, Daimler-Benz began to show signs of making a profit only three years after the war ended in 1948 and 1949.
After the company was rebuilt, it grew quickly and broke sales records. Their growth was not only due to domestic interest but also to exports to foreign customers. Part of this growth was also the direct result of the German Wirtschaftswunder, otherwise known as the Miracle on the Rhine.
After the currency restructuring of 1948, West Germany’s economy enjoyed a period of fantastic industrial growth as well as low inflation. This was in stark contrast the economic depression and out of control inflation that Germany saw after the end of the First World War.In 1948, a currency change was negotiated from the Reichsmark to the Deutsche Mark. This period of growth was called the German Economic Miracle, or the Wirtschaftswunder. Daimler-Benz thrived during this period of German history. In 1954, Daimler-Benz began reaching turnovers of over a billion marks each year. The amount of Mercedes-Benz automobiles sold during this time became one of the symbols of the German Wirtschaftswunder.
Until the 1950s, Daimler-Benz was forced to rely upon independent sales distributors across the world to take care of its products. This process was risky and inefficient, so they began to expand their sales network. They started by expanding their networks within Europe and by 1955 they already had 178 general distributors across the world. Daimler-Benz lost much of its international infrastructure during the post-war American-led restructuring and the years of economic growth helped them to regain their status as an automotive dealer for the global market.
Daimler-Benz took this opportunity to expand their production facilities to the international market. This served two purposes. Not only were they able to take advantage of less expensive costs of production by moving abroad but some governments began to require a local production plant before they would grant an import license. As a result, Daimler-Benz began a period of rapid international expansion. They opened plants in Brazil, Argentina, and India. All of these governments required the use of local resources in exchange for an import license. They also began to expand the number of plants to include production facilities in Iran, Turkey, and South Africa.
One of the largest factors of the company’s success during this period was that it was successfully able to breakthrough into the American market. Daimler-Benz of North America was established in 1955. Daimler-Benz began to work with Max Hoffman, an Austrian importer of luxury cars, which was based in New York. It was Hoffman who suggested the purchase of the Mercedes-Benz 300SL Gull Wing to his dealers across American. The car was so popular in American that 80% of all of the 300SL vehicles produced were sold to American customers. The 300SL Gull Wing became the first Mercedes-Benz to thrive in an international market.
Motorsport also helped establish the name of Mercedes-Benz as a luxury vehicle for the sophisticated client. Daimler-Benz put together teams and vehicles for some of the most well-known races in motorsports. They sent cars to the Carrera Panamericana Mexico as well as the Grand Prix racing circuits. Their stylish success on the track began to build them an undeniable reputation for being a technologically advanced luxury vehicle
The company’s commercial vehicles also helped propel their growth in the post-war period. They began to ramp up their production of commercial vehicles as soon as they were allowed to begin production again. They introduced the Mercedes-Benz L 3250 in the year 1949. The establishment of the Federal Republic of Germany was also finalized in 1949. The new republic required a new system of public transport and Daimler-Benz was more than happy to provide the busses and trucks that the new state required.
A STABLE LEADER
The economic boom of the previous decade set Daimler-Benz up for a secure and stable ride through the 1960s. In the 1970s, the automotive industry suffered from instability primarily because of the 1973 oil crisis. It was not just the scarcity of oil that left an impact on manufacturers. Many governments began to apply pressure on manufacturers to create cars that were fuel-efficient to move away from their dependence on foreign oil. Yet, Daimler-Benz held its ground while the industry changed, remaining highly ranked internationally. The company also became the leader of luxury cars as well as buses and trucks in Europe.
The oil crisis of 1973 was the result of an oil embargo by the Organization of Arab Petroleum Exporting Countries. Oil rose significantly during this period from $3 per barrel to almost $12. The oil crisis was the direct response to the American involvement in the Yom Kippur War. OAPEC launched the embargo to protest the United States continuing to supply arms to Israel. The oil embargo was placed against the US, UK, Canada, Japan and the Netherlands. Thankfully, Daimler-Benz was so diversified that they were not seriously affected by the oil embargo, which was mainly directed at the United States.
Instead of continuing their international growth during this period, Daimler-Benz began to expand from within their organization. They added the expansion of several plants during the 1960s and 1970s. They also considered new products. While they continued to produce luxury products, they wanted to find a method of diversification. Despite their financial stability, there were some major changes within the leadership at Daimler-Benz. A 14 percent share of the company was sold to the Government of Kuwait, and another 29 percent share was sold to Deutsche Bank.
Daimler-Benz found substantial growth from the end of the 1950s. After years of stable business punctuated by the occasional oil crisis, Daimler-Benz knew that in order to keep the market share that they had earned, they would have to continue to innovate. This spirit of innovation has moved with the company since its inception in the late 19th century and continued for over 100 years through the last decades of the 20th century. Only three of the dozens of technological advances made during this period are highlighted below:
- Daimler-Benz began producing CFC-free climate controlled vehicles well before any other automotive company. They recognized that the chemicals used in CFC automators were both unfriendly to the driver and unfriendly to the environment.
- The Control Area Network is the communications system that links all of the systems in a car together so that it can operate at maximum efficiency. Daimler-Benz began to make this a standard feature in their vehicles in 1992.This technology was created by Bosch for industrial uses, but Daimler-Benz adapted it for their luxury vehicles years before any other manufacturer considered a possibility.
- The smart key system that many drivers take advantage of today was invented by Siemens in the 90s and then adapted and introduced into the automotive industry in the Mercedes-Benz S-Class in 1998. Daimler-Benz was awarded the patent for their keyless entry technology in 1997.
Daimler-Benz has seen many changes over the last century. Since 2007, the company has been known as Daimler AG. The company has persevered through adversity and relied on its business acumen and long history of innovation. Today, Mercedes-Benz is still world-renowned for its incredible engineering and supreme luxury.