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Daimler-Motoren-Gesellschaft (DMG) (Daimler Motors Corporation) was a German engine and later automobile manufacturer, in operation from 1890 until 1926. Founded by Gottlieb Daimler and Wilhelm Maybach, it was based first in Cannstatt (today Bad Cannstatt, a city district of Stuttgart). Daimler died in 1900, and their business moved in 1903 to Stuttgart-Untertürkheim after the original factory was destroyed by fire, and again to Berlin in 1922. Other factories were located in Marienfelde (near Berlin) and Sindelfingen (next to Stuttgart).

The enterprise was begun to produce petrol engines but after the success of a small number of race cars built on contract by Wilhelm Maybach for Emil Jellinek, it began to produce the Mercedes model of 1902. After this automobile production expanded to become DMG's main product, and it built several models.

Because of the post World War One German economic crisis, DMG merged in 1926 with Benz & Cie., becoming Daimler-Benz and adopting Mercedes-Benz as its automobile trademark. A further merger occurred in 1998 with Chrysler to become DaimlerChrysler. The name was finally changed to just Daimler AG in 2007 when Chrysler was sold.

Daimler, Maybach, and DMG at Seelberg

By 1882 both Daimler and Maybach had left Nikolaus Otto's Deutz AG Gasmotorenfabrik. In 1890 they founded their own engine business, Daimler Motoren Gesellschaft (DMG). Its purpose was the construction of small, high speed engines they had developed based on the same stationary engine technology.

DMG thus grew out of an extension of the independent businesses of Daimler and Maybach, who would revolutionize the world with their inventions for the automobile of a four-stroke petrol engine, carburetor, and so on. They would manufacture small internal combustion engines suitable for use on land, sea, and in the air (the basis for a symbol Daimler devised of a three pointed star, with each point indicating a different way).

On July 5, 1887, Daimler purchased a property in Seelberg Hill (Cannstatt) previously owned by Zeitler & Missel who had used it as a precious metal foundry. The site covered 2,903 square meters, cost 30,200 Goldmark, and from it they produced engines for their successful Neckar motorboat. They also sold licences for others to make their engine products and Seelberg became a centre of the rapidly growing automobile industry.

Daimler ran into financial problems because sales were not high enough and the licences didn't yield significant profit. An agreement was reached with the financiers Max Von Duttenhofer and William Lorenz, both of whom were also munitions manufacturers, along with the influential banker Kilian von Steiner, who owned an Investment Bank, to convert the private business to a public corporation in 1890. (This agreement is regarded by some historians as a "devil's pact", as the inventors never got along with the new status.)

Not really believing in automobile production the financiers expanded the stationary engine business, as they were selling well, and even considered a merger with Otto's Deutz-AG. (During 1882, Gottflieb Daimler had serious personal problems with Nicholas Otto, when Daimler and Maybach worked for Otto.) Daimler and Maybach continued to advocate car manufacturing and as a result even left DMG for a short period. Daimler's friend, Frederick Simms, persuaded the financiers to take Gottflieb Daimler and Wilhelm Maybach back into faltering DMG in early 1896. Their business was re-merged with DMG’s. Daimler was appointed General Inspector, Maybach chief Technical Director and Simms a director of DMG.

From 1892, following the withdrawal of Gottlieb Daimler and Maybach to their own business to concentrate on cars, the enterprise had been close to a crisis but stabilised itself, selling mobile and stationary engines through a number of retailers around the world, from New York City to Moscow.

In 1900, Gottlieb Daimler died. Later DMG's successful Mercedes models based upon race cars designed by Wilhelm Maybach to the specifications of Emil Jellinek (who wanted a more modern and safer car, following the death of Willhelm Bauer in a Daimler racer) changed the board's outlook in favour of the automobile. Maybach continued as designer for a while, but quit in 1909 and was replaced by Gottlieb's son, Paul.

Expansion (1902 to 1920)

DMG's automobile sales took off, particularly with the first Daimler-Mercedes engine designed by Maybach placed into several race cars of 1900 built for Emil Jellinek. That race car was later referred to as the Mercedes 35 hp. Production capacity was extended to Untertürkheim. In 1902, DMG produce the first Mercedes models, led by the 60, the most famous early model, and officially adopted Mercedes as its automobile trademark; capable of 120 km/h (75 mph), the 60 combined touring and racing capacity, and was the top-status car to own (or for other makers, among them Berliet, Rochet-Schneier, Martini {Switzerland}, Ariel {Britain}, Star {Britain}, and FIAT, to copy; in the U.S., Daimler Manufacturing Company {Long Island, New York} may have built one under licence in association with Steinway). In part due to the model 60's success, the number of DMG employees went from 821 (1903) to 2,200 (1904).

1906 to 1913 were further expansion years, with the creation of new capacity reducing the number of external suppliers. Increased mechanization took the annual productivity from 0.7 cars per worker, to 10. In 1911, shares of DMG were listed on the Stuttgart stock exchange.

Berlin-Marienfelde

On October 2, 1902, DMG opened a new works in the mountainous region to the south of Berlin. Its scope was initially limited to motorboat and marine engines. Later, it expanded into making trucks (1905) and fire trucks (1907). The region became a centre of the automobile industry, and other businesses moved in.

Untertürkheim

Untertürkheim was an ideal location to site a large factory as it was close to both the Neckar river and the Stuttgart-Ulm railroad. The local Mayor Eduard Fiechtner sold the land (185,000 square meters) at a low price and also arranged for a railroad extension with its own station and energy from the Neckar's hydro-electric plant which had been built in 1900.

DMG had planned to open the facility in 1905 but the total destruction of Cannstatt's factory by fire in 1903 hastened the work and the new Art-Nouveau building, with a jagged-roof, was brought forward to start production in December 1903. The work force continued to grow.

On May 17, 1904, Unterturkheim became DMG's headquarters with the rest of the administration staff moving in on May 29. In 1913, an additional 220,000 square meters were acquired and between 1915 and 1918 it was extended further. By the 1920s, Untertürkheim had almost all the production processes on one site from foundries to final car assembly. In 1925 the DMG design department also moved in.

The Cannstatt Fire (1903)

On the night of June 10, 1903, the original Seelberg-Cannstatt plant suffered a great fire. All the machinery and 93 finished Mercedes cars, a quarter of the annual production, were destroyed, together with a small museum with historical items like Daimler-Maybach's first ever motorcycle, the Reitwagen.

The displaced workers received haven-salaries and additional bread rations. Neighboring businesses lent workshops, allowing production to continue. DMG created a Relief Fund (one of the first worker insurance schemes) and began building separator blocks in all its plants.

The following year, 1904, the whole operation moved to Untertürkheim. The last unit produced in Seelberg rolled out in the first weeks of 1905.

Sindelfingen

At the outbreak of the First World War, in 1914, there was a rush to produce war supplies. In the autumn of 1915, DMG opened the Sindelfingen factory for military vehicles, aircraft engines, and even entire aircraft. After the war, limited by the Versailles Treaty, it produced only automobile bodies.

Automobiles

Daimler had sold automobile-engine licences all over the world including to France, Austria, the UK, and the United States through an agreement with the piano-maker Steinway, in New York.

The first DMG automobile sale took place in August, 1892 (its registration still survives) to the Sultan of Morocco.

Commercial vehicles had also been made mainly using a Phoenix engine, but up to 1900, when Daimler died, the bodies had not been standardised.

In 1902, the Mercedes car was built, compact and modern, with many improved features, a move which sparked the board's interest in automobile production. Mercedes then became DMG's main car brand name. There were some small exceptions: the Mercedes Simplex of 1902-1909, (the name indicating it being "easy to drive") and the Mercedes Knight of 1910-1924, featuring Coventry Daimler's development of Charles Yale Knight's sleeve-valve engine. All models were priced by their hp-rating.

The first truck, of 1.5 tons payload, was sold to London's British Motor Syndicate Ltd on October 1, 1896. Its rear-mounted Phoenix engine produced 4 hp (3 kW) at 700 rpm.

In 1897, the production of light commercial vehicles began. At that time they were popularly called business vehicles, and were very successful in the United Kingdom.

At the first Paris Motor Show, in 1898, a 5-ton truck was displayed, with a front-mounted engine.

Phoenix (1894)

In 1894, while working from temporary premises in the unused Hermann Hotel in Cannstatt, Gottlieb Daimler, his son Paul, and Wilhelm Maybach designed the Phoenix engine. It amazed the automobile world with:

four cylinders placed vertical and parallel (a first for an automobile engine)
camshaft-operated exhaust valves
spray-nozzle carburetor (patented by Maybach in 1893)
improvements in the belt-drive system.

Production of this engine which was put into cars, trucks, and boats became DMG's main product until the Mercedes car of 1902.

Mercedes (1900)

In 1902 an automobile that would later be called the Mercedes 35 hp was created by Maybach to the order of the successful Austrian merchant Emil Jellinek who became fascinated by both the Phoenix engine and race cars. The name was derived from an engine Maybach built to the specifications of Jellinek in 1900 that could achieve 35 hp (26 kW). Jellinek had stipulated that the engine be called Daimler-Mercedes and when it was successful, he stipulated a new model in an edition of vehicles that he would market and use personally. Later this was referred to as the Mercedes 35 hp (26 kW) model. It was never marketed by DMG until its success was seen to be substainial.

Jellinek competed as a driver, painting "Mercedes" (Spanish for godsend), on the automobiles he raced after his 10-year-old daughter. Jellinek's pursuit of higher speed brought him to Stuttgart personally, to Wilhelm Maybach's office where he also met with Paul Daimler, son of Gottlieb. Together they designed a new kind of automobile that would be "larger, wider, and with a lower center of gravity". A small number would be produced for Jellinek under contract. This was the first true automobile designed by DMG, as opposed to a coach with an engine fitted into it.

Blending the technical refinements of Maybach's new 4-cylinder engine, with a new chassis the automobile stunned the motorsport world of 1901. Jellinek had promised to purchase a large number of the race cars, (36 units for 550,000 Goldmark), if he could also be the sole concessionaire in Austria-Hungary, France, Belgium, and the USA, using the name Daimler-Mercedes for the engine, and also become a member of the Board of Management.

In June 1902, after DMG realized that they had already conceded their Daimler trademark to Panhard & Levassor for the whole of France, they decided to name all their cars Mercedes after the engine and began to produce the Mercedes series. The great demand for the car soon had DMG operating at full-capacity.

Racing

In these early years, car races were used as advertising for their makers. Therefore, both DMG and Benz & Cie., their great rival, put the best of their cars on the track. Daimler cars were able to beat Benz until 1908, when a Benz achieved the land speed record, but in the following years, both brands were equal.

Daimler-Benz and the Mercedes-Benz brand (1926)

For the two separate businesses to survive the financial problems of the day, in 1919, Benz & Cie. proposed a merger, but DMG formally rejected it in December. Then, as the German crisis worsened, the struggling firms met again in 1924 and signed an Agreement of Mutual Interest, valid until the year 2000. They standardized design, production, purchasing, sales, and advertising—marketing their car models jointly—although keeping their respective brands.

On June 28, 1926, DMG and Benz & Cie. merged into Daimler-Benz AG, establishing its headquarters in the Untertürkheim factory.

Their automobiles were named Mercedes Benz, in honour of DMG's most important car model and the last name of Karl Benz. Its new trademark consisted of a three-pointed star surrounded by the traditional laurels of Karl Benz's logo and labeled Mercedes Benz. The next year, 1927, the number of units sold tripled to 7,918, and diesel truck production was launched.

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