At the end of World War I, Duesenberg ceased building aviation and marine engines in Elizabeth, New Jersey. In 1919 the Duesenberg brothers sold their Minnesota and New Jersey factories to John Willys and moved to a new headquarters and factory in Indianapolis, where the "Duesenberg Automobile and Motors Company, Inc.", was established in 1920 to begin production of passenger cars. The plant was located on a 17-acre (69,000 m2) site on West Washington street at Harding street until 1937.
Although the Duesenberg brothers were world-class engineers, they were neither good businessmen nor administrators; they were unable to sell all the units of their first passenger car, the Model A. This had the first "mass-produced" straight eight engine in the U.S. It was an extremely advanced and expensive automobile (prices began at $6,500), offering features such as single overhead camshafts, four-valve cylinder heads, and the first four wheel (16") hydraulic brakes (designed by Fred) offered on a passenger car in the U.S. The Model A was a lighter and smaller vehicle than the competition, but was more powerful and the fastest car of its time. Among the celebrities who purchased this model were Tom Mix and Rudolph Valentino.
The model experienced various delays going from prototype to production. Deliveries to dealers did not start until December 1921. Sales lagged and the goal of building 100 Duesenbergs each month proved far too high, as the Indianapolis plant struggled to roll out one a day. In 1922 no more than 150 cars were manufactured, and only 650 Model A's were sold over a period of six years.
Winning races did not translate into financial success either, although that winning reputation would eventually attract new investors, who then supplied the cash flow to prop up the production facility. The brothers continued to engineer excellent engines for cars, boats, and a few planes but only as employees of various capitalist investors who bought the rights to their famous family name.
The firm had already acquired a considerable aura of prestige when in October 1919, Fred signed over the rights to his name, patents and drawings for a passenger car to a pair of promoters, Newton E. Van Zandt and Luther M. Rankin, who demonstrated that they didn't know all that much about the car business either. On March 8, 1920, these people became president and vice president of the "Duesenberg Automobile and Motors Corporation of Indianapolis". Fred was chief engineer and Augie his assistant, and both were salaried as employees.
Van Zandt quit after a year, and business went from bad to worse in 1923. In 1924 the company went into receivership, but somehow it survived that year. In 1925, the firm’s name was changed to “Duesenberg Motors Corporation” and Fred assumed the title of president. Fred and August struggled to keep the company, but to no avail, as they weren't able to raise enough capital.