The Mercedez Benz company started out through a merger in 1926.

This history of Mercedes-Benz starts in the late 1800s and ends with their post World War I experience. Mercedes-Benz is a car produced by the Daimler-Benz company of Germany. The Daimler-Benz company was founded through a merger in 1926. In the mid-1880s, Gottlieb Daimler (1834?1900) worked with Wilhelm Maybach (1846?1929), and Karl Benz (1844?1929) and independently invented the internal combustion engine-powered automobile in southwestern Germany.

Karl Benz and Gottlieb Daimler

In 1886, Benz built a motorized tricycle. The Victoria, built in 1893, was his first four-wheeler. The first production car was the 1894 Benz Velo, which participated in the first-recorded car race – the Paris-Rouen race. In 1895, Benz built his first truck.

In 1886, Daimler built a horseless carriage. In 1888, Daimler made a business deal with William Steinway (of piano fame) to produce Daimler’s products in the United States. From 1904 until a fire in 1907, Steinway produced Mercedes passenger cars – Daimler’s light trucks – and his engines in Long Island.

On March 8, 1886, Daimler purchased a stagecoach made by Wilhelm Wimpff&Sohn. Daimler and Maybach modified it to hold an internal combustion engine. No other travel vehicles of the time were propelled by this type of engine. It was a carriage without horses. Daimler and Maybach built the first four-stroke engine-powered automobile with four wheels in 1889. They founded Daimler Motoren Gesellschaft (DMG) in 1890 and sold their first automobile in 1892.~

In 1899, DMG automobiles built in Untertrkheim, Germany were raced successfully by automobile enthusiast and dealer Emil Jellinek. Jellinek had the name of his daughter, Mercedes, painted on the automobiles for good luck. Jellinek’s desire for faster race cars spurred the development of the 1902 DMG model that would be the first of the DMG Mercedes series, bearing the name of his daughter. Lighter and smaller, the new Mercedes had a 35 horse power and a top speed of 55 miles per hour (mph)!

Benz was also busy. He founded Benz & Cie. The company became the world’s first and largest manufacturer of automobiles by 1900. In 1903, the Parsifil was Benz’s response to the Mercedes. A two cylinder vertical engine produced a top speed of 37 mph in this car.

Aware of the promotional potential of racing, both Daimler and Benz entered many of them. Until 1908, Daimler had overshadowed Benz in racing endeavors. But at the 1908 French Grand Prix, Benz took second and third place behind a Mercedes. From that point on, both Benz and Daimler did well in racing.

WWI and Afterward

At the beginning of WWI, both factories were converted into war production sites, but afterwards both resumed car production.

The falling German economy hurt both companies. There was very little fuel for cars and a 15 percent luxury tax on automobile production hurt sales. This market sent Benz and Cie. seeking a partner. The only one the board considered was DMG.

It looked like a good deal. Karl Jahn, a Benz board member, approached DMG about a possible merger. There were talks, but it was abandoned in December of 1919. Times were bad for Germany and for both companies. As the German economy worsened, a new Benz automobile eventually cost 25 million marks.

From sheer economic necessity, in 1924 Benz and DMG signed an agreement of mutual interest. The two companies merged with relative ease on June 28, 1926.Although both companies retained their identities, the agreement was valid until the year 2000. This is the fascinating history of Mercedes-Benz.