The end of the First World War presented great challenges for the German automotive industry. In the years from 1914 to 1919 hardly any development work had been carried out on civilian products. Economically, the collapse of the currency, the growing number of new automotive companies which had previously operated in the armaments sector, and the loss of important foreign markets had a negative effect.
These problems, plus the penetration of the domestic market by foreign producers like the Ford Motor Company, which were aided in their efforts by the Peace Treaty of Versailles, led to a severe structural crisis in the German automotive industry.
Though the sale of the Sindelfingen and Marienfelde sites had been considered at times, Daimler Motorengesellschaft decided not to sell and planned diversification of the product range in 1922.
A subsidiary set up in Marienfelde took up the production of bicycles under the brand name Mercedes in 1923. The typewriter production similarly planned for Untertürkheim did, however, not materialise on a major scale.
As in other industries, the companies strived to form larger units in order to achieve economies of scale. After initially entering into a joint venture with the aim of rationalising production, and with a major role also being played by Deutsche Bank, the two companies Daimler Motorengesellschaft and Benz & Cie. finally merged in 1926 to form Daimler-Benz AG with its registered office in Berlin and administrative headquarters in Stuttgart.
Under the leadership of Wilhelm Kissel the initial difficulties were overcome and the company was stabilised by strictly limiting the number of models and introducing a flexible production system, first and foremost at the large factories in Untertürkheim, Sindelfingen and Mannheim. This also made it possible to successfully overcome the world economic crisis that broke out in 1929.
In 1928 the German automaker had only four basic models in the medium-size and luxury car segments.
Of these, the supercharged sports car in its various versions S, SS and SSK was the showcase model of the Mercedes-Benz brand which not only achieved motorsport success, but also helped improve the company's export record.
In addition, during the world economic crisis the Stuttgart automaker managed to add the 170 Mercedes to its model range. In the commercial-vehicle sector, Daimler-Benz introduced the first compressor less six-cylinder diesel truck in 1927. The Lo 2000 developed by Daimler-Benz at the beginning of the 1930s brought the company the major breakthrough in the truck business.