Stuttgart – The history of Daimler AG goes back to 1886 – the year Carl Benz and Gottlieb Daimler invented the automobile independently of one another. Benz invented the Patent Motor Car in Mannheim,, while Daimler in Stuttgart invented the Daimler Motorised Carriage. They each founded their companies, Benz & Cie. and Daimler-Motoren-Gesellschaft (DMG), and in competition rose to become two leading automotive manufacturers. Gottlieb Daimler died in 1900, just short of his 66th birthday. Carl Benz enjoyed a longer life and lived to see the automobile flourish, dying in 1929 at the age of 84 years.
The idea of combining the expertise of the two automotive manufacturers first surfaced during the First World War. However, it was not until 1924 that the two signed an agreement declaring a community of interests in which DMG and Benz & Cie. combined their expertise ‘while maintaining their legal independence’. The principal reason behind the community of interests was to establish a combined approach to sales. Finally, in June 1926 Benz & Cie. and Daimler-Motoren-Gesellschaft formally merged to form Daimler-Benz AG (DBAG). This merger simultaneously gave rise to the Mercedes-Benz automotive brand.
The Great Depression and Second World War
Daimler-Benz was also forced to make cutbacks as a result of the Great Depression of the late 1920s. The company was forced to introduce fundamental changes to model policy during this period, and in keeping with the general trend brought a relatively small passenger car onto the market. The Mercedes-Benz 170 with 1.7-litre engine was introduced in autumn 1931 and at 4,400 Reichmarks was around one quarter the price of the brand’s next cheapest model. With production of 90,000 units in total, the four-cylinder Mercedes-Benz 170 V was the most successful Mercedes-Benz of the pre-war years.
By late 1932 the German automotive industry was already beginning to show signs of new growth and to look to the future again with newfound optimism. The following year saw the rise to power of the National Socialists. Reichskanzler Adolf Hitler recognised at an early stage the importance of ‘mobilising the people’ for the ‘technical war’ of the future, and soon after taking power he introduced relief measures on all aspects of automotive manufacturing. From 1937 onwards, Daimler-Benz AG increasingly built vehicles for military use, as well as aero-engines and large-scale engines, because that was what the Nazi leaders demanded. In the run-up to the war the proportion of armaments production increased steadily as a fraction of company turnover. The largest corporate division was truck production; on the other hand, passenger car production – which since the start of the war had been restricted to vehicles for military use – went into decline and by late 1942 had virtually ceased altogether. The company now accelerated the production and assembly of military components for the German Army, Air Force and Navy. Increased armaments production also called for new workers, since many employees were already fighting as front-line soldiers. To begin with the company employed women in order to meet the required unit numbers. But since this new workforce was insufficient, Daimler-Benz also use forced labour. These prisoners-of-war, abducted civilians and prisoners from the concentration camps were accommodated close to the plants: forced labourers from Western Europe were housed in hostels, private quarters or schools. ‘Eastern workers’ and prisoners-of-war were interned in poor conditions in barrack camps. Prisoners from the concentration camps were guarded by the SS in degrading and inhumane conditions. They were ‘loaned’ to companies for a fee. By 1944 almost half of the 63,610 Daimler-Benz employees were civilian forced labourers, prisoners-of-war or concentration camp prisoners.
After the war Daimler-Benz admitted its complicity with the Nazi regime and worked closely with the initiative ‘Erinnerung, Verantwortung und Zukunft’, a foundation of German industry, which demanded humanitarian compensation for former forced labourers.
Renewed sparkle during the ‘economic miracle’
The starting point for Daimler-Benz AG during the period from the end of the Second World War to the introduction of the Deutschmark was described by the Board of Management of the day as ‘complete breakdown, yet also the beginnings of the company’s revival,’ since with the occupation of the plants by the Allies the company had ‘practically ceased to exist’. But the Allies in the West soon had the production lines operating again, so that Daimler-Benz was in a position to help with the economic reconstruction of the country. The Untertürkheim plant was provisionally reopened on 20 May 1945, and the Sindelfingen plant restarted production in 1947. In particular, there was a pressing need for commercial vehicles to help with the reconstruction of Germany. This was anything but profitable for the manufacturer, since the vehicles were allocated to customers with coupons at fixed prices.
With its new passenger car and truck models from 1949 onwards, the Mercedes-Benz brand continued the company’s pre-war success, consolidating and putting behind it the years of reconstruction. During the German economic miracle the Mercedes-Benz brand regained its former sparkle, the company blossomed and once again could begin planning expansion. And not just in Europe: by 1949 Daimler-Benz had made initial contact with Brazil, for example, and local production started up there shortly afterwards. Daimler also invested in production facilities in Argentina and India in the early 1950s.
Growth and expansion
Domestically, the first major post-war acquisition of Daimler-Benz was the 1958 majority stake in Auto Union GmbH of Ingolstadt, founded in 1931, where from 1959 onwards the DKW Junior was built. In 1964, Daimler-Benz sold Auto Union to Volkswagen and used the profits to build the truck plant at Wörth. Following the acquisition of Hanomag-Henschel and Krupp in the late 1960s/ early 1970s, Daimler-Benz became the world’s number one truck manufacturer. 1970 was also the year in which MTU Motoren- und Turbinen-Union (engine and turbine union) was founded, which united the MAN Allach plant and the Daimler-Benz AG plant complex in Friedrichshafen.
In the mid-1980s, under the leadership of Chairman of the Board of Management Edzard Reuter the company pursued a strategy to turn the purely automotive manufacturer into an integrated technology concern. This involved acquiring expertise from the electronic and aviation industry, in order to achieve synergy effects with other business divisions. In 1985, Mercedes-Benz bought a share in the aerospace company Dornier and AEG AG, whose business operations included energy, industrial and rail technology, communications systems and household appliances. The vehicles business was integrated into the newly created Mercedes-Benz AG in 1989. Only its products, that is to say the vehicles, would from that point on bear the three-pointed star on the roads of the world. The aerospace activities of Dornier and MTU as well as Telefunken systems technology were brought under the umbrella of Deutsche Aerospace AG, DASA for short, which was renamed Daimler-Benz Aerospace in 1995. To this was added Messerschmitt-Bölkow-Blohm GmbH (MBB). In 1989, the decision was taken to develop Daimler Benz InterServices (debis) AG, which offered a comprehensive range of services ranging from software products and computer communication to financial services, insurance, mobile telephony and marketing.
But the international boom slowed dramatically in early 1990. As a result, from 1992 onwards restructuring and cost-cutting measures were implemented. In May 1995, Reuter handed over the future of the company to his successor Jürgen E. Schrempp, who changed the company’s direction by restoring the focus to the vehicles business and giving the company a more international orientation. In the late 1990s, for example, he acquired an interest of 37 per cent in Asian carmaker Mitsubishi Motors and 10 percent in the Hyundai Motor Company. In 1998, the Group announced its merger with the American carmaker Chrysler Corp. The financial markets received the news with great optimism. Despite high yields in 1998 and 1999, however, the financial position of the American manufacturer worsened. The clean break came in 2007, when Dieter Zetsche, CEO of DaimlerChrysler since 1 January 2006, separated from Chrysler. With effect from 4 October 2007 the company resumed trading under the name Daimler AG.
A tradition of success
Today Daimler AG is one of the world’s most successful automotive companies. With the divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and Daimler Financial Services, the automotive manufacturer is one of the biggest producers of premium cars and the world’s biggest manufacturer of commercial vehicles. In addition, Daimler Financial Services offers a comprehensive range of automotive financial services, including financing, leasing, insurance and fleet management.
Under Dieter Zetsche the company also succeeded in gaining a foothold in the often rather difficult Chinese market. Moreover, Daimler AG agreed in April 2010 a far-reaching strategic cooperation with the Renault-Nissan alliance, to work jointly for example on an architecture for small cars, expansion of the engine portfolio and further development of the van segment. The Group also took a stake in Toll Collect GmbH through Daimler Financial Services AG, which collects truck tolls in Germany. Daimler also has an interest in the European Aeronautic Defence and Space Company N.V. (EADS), the parent company of Airbus and Eurocopter.
Innovations for the future
In addition, Daimler invested in the development of alternative drive systems with a view to enabling zero-emissions mobility in the long term. At the same time, the inventor of modern mobility became the only carmaker in the world to invest in both the hybrid and electric motor and the fuel cell. Evidence of the far-sightedness of the research team at Daimler AG is to be found in the company’s smallest passenger car, the smart, as Mercedes-Benz began working on a study for the automotive future of the year 2000 as far back as the 1970s. The project for a very special compact car came about as a result of the oil crisis, which in 1973 even led to driving bans in Europe. The engineers and designers of the Mercedes-Benz project team designed a particularly fuel-efficient, environment-friendly and compact vehicle for the urban conurbations of the future – without compromising on aspects of driving comfort and safety. The first smart was launched in 1998, and since late 2009 a small series of the second-generation vehicle has been coming off the production line in the form of the smart fortwo electric drive featuring an innovative lithium-ion battery.
‘One could say that we make exciting cars greener and green cars more exciting,’ said CEO Dieter Zetsche in the 2009 Annual Report. ‘This can only be done with pioneering technologies – and we have them. At Mercedes-Benz Cars, we were able to reduce the average CO2 emission value for our fleet by a full 13 grams to 160 g/km in 2009.’
In 2009, the Group sold 1.6 million vehicles and employed a workforce of more than 256,000 people; revenue totalled € 78.9 billion. By 30 September 2010 the Group was employing a workforce of just under 260,000 people, had already sold around 1.4 million vehicles between January and September and sales in the third quarter alone rose by 30 per cent compared with the same period the previous year to more than € 25 billion.