The outbreak of the Second World War
brought to an end this development. Auto Union AG built its last civil
vehicles in 1940. From then on, it was obliged to heed official
instructions and focus its production operations on the war effort.
Auto Union AG was in existence for 16 years. For its last three years it
was in effect merely awaiting liquidation, and for six years previous to
that, the war had caused its automotive operations to be paralysed. Auto
Union's wealth of innovation and meteoric growth all took place within
the space of its first seven years. The innovation and skill of its
automotive experts is reflected in over 3,000 patents granted both in
Germany and elsewhere. One in four passenger cars registered as new in
Germany in 1938 was built by Auto Union. More than one-third of all
newly registered motorcycles in Germany were DKWs. Auto Union AG was the
behind numerous technical developments, research findings and ideas that
played a pioneering role in the creation of the modern-day car.
After the end of the war, Auto Union AG's production facilities were
expropriated and dismantled by the occupying Soviet forces. In 1948 the
company was deleted from the trade register of the city of Chemnitz. By
this time, several of Auto Union AG's senior management had moved to
Bavaria, where the company had found a new home in Ingolstadt.
A new beginning in Ingolstadt
A new company bearing the name Auto Union
GmbH came into being on September 3, 1949 in Ingolstadt, to uphold the
automotive tradition of the four rings. It is this company that is the
actual precursor of the present-day AUDI AG. From its base in West
Germany, its purpose was now to maintain the tradition that the former
Auto Union AG had established in Saxony.
Life at the time of its re-establishment was frugal, so small,
economical vehicles were called for. In the early years, the only
vehicles built in Ingolstadt with the four-ring emblem were DKW
motorcycles and cars, with their typical two-stroke engines. The formal
re establishment of the company in 1949 was actually already the second
step towards a new beginning after the war. The first move after "zero
hour" took place on December 19, 1945, when the "Zentraldepot für Auto
Union Ersatzteile GmbH" was founded in Ingolstadt. This central depot
had the task of supplying spare parts for all pre war Auto Union
vehicles that had survived the ravages of the past six years; there were
all of 60,000 such vehicles in the western occupied zones.
So why Ingolstadt?
One argument in favour of Ingolstadt as
the home of the central depot was its good transport connections,
located as it was at the heart of Bavaria. Influential figures in the
Ingolstadt city authorities presented a good case in favour of the
central depot, arguing that it would aid the regional employment market.
However, the key reason for the re-establishment of the company in
Ingolstadt was its centuries-old military tradition as a garrison town:
this legacy included expansive outdoor areas and numerous barracks,
outbuildings, casemates and the like – invaluable assets at a time when
there was precious little capital for erecting new buildings.
From its headquarters in the former army supplies office in
Schrannenstrasse, the company was gradually able to take over a variety
of other buildings such as the Friedenskaserne barracks, the New
Arsenal, the NCOs' building, the vehicle halls, the ammunition store,
the riding hall and the large parade ground. As its facilities were
scattered all over the city, a rational production process was scarcely
possible. The workers referred to it tongue-in-cheek as the "United Hut
and Shed Company."
The "Bavarian Strike"
August 9, 1954 saw the outbreak of a
strike in the Bavarian metalworking industry which many inhabitants of
Ingolstadt still vividly recall. This was one of the first major
industrial disputes in the young Federal Republic of Germany, and
companies in the metalworking sector even went so far as to call it the
"most stirring and significant event of the post-war years."
Auto Union, one of the
largest employers in the city, with a workforce of around 5,000,
likewise saw most of its workers lay down their tools. Their demands
included a shorter working week, higher pay and better working and
living conditions. The "Bavarian strike" lasted until August 31, 1954,
when an agreement was finally reached through arbitration. An average
pay increase of just over four percent was the outcome.
The Liaison with
The "Bavarian strike" cost Auto Union
around DM 920,000. 1954 was nevertheless the first year in which the
company recorded a notable profit (around DM 400,000). In the same year
Friedrich Flick, the majority shareholder in the iron and steel works
Eisenwerk-Gesellschaft Maximilianshütte mbH Sulzbach-Rosenberg,
popularly known as "Maxhütte", acquired a financial interest in Auto
Union GmbH. He realised some years previously that the Ingolstadt car
manufacturer would one day need a partner with plenty of capital.
In 1957, Flick advocated the takeover of Auto Union by Daimler-Benz. At
that time, he owned 41 percent of Auto Union's shares, as well as a 25
percent stake in Daimler-Benz. He could also rely on the backing of the
Swiss industrial magnate Ernst Göhner, who likewise held a 41 percent
interest in Auto Union. Daimler-Benz AG accepted the offer. In view of
growing pressure from foreign competition, it wanted to extend its
production range in market segments lower down the range. Flick also
dropped Daimler-Benz a large hint that he was in negotiation with Ford,
On April 24, 1958 Daimler-Benz acquired around 88 percent of Auto
Union's shares for just over DM 41 million. One year later, in 1959, the
remaining shares were also sold to Daimler-Benz. Daimler's board of
management spokesman Fritz Könecke summed up the merger of Germany's
second-largest and fifth-largest car manufacturers as follows: "We have
married a nice girl from a good, old-established family!" On April 9.
1958 the business newspaper "Handelsblatt" wrote: "With the takeover of
Auto Union GmbH, which reports annual turnover of around DM 400 million
and employs a workforce of 10,000, the Daimler-Benz Group is now once
again the Federal Republic of Germany's largest car manufacturer in
terms of sales revenue, too."
A New Plant in
At the time of the Daimler-Benz takeover,
the only Auto Union vehicles in production in Ingolstadt were
motorcycles and the DKW rapid delivery van. Auto Union's car production
operations were concentrated at the Düsseldorf plant that had gone into
operation in 1950.
For want of capital, the company had put back production of a modern,
low-priced small car that had been in development since the mid-1950s
and that was one day to be launched under the name "DKW Junior".
Although the takeover by Daimler-Benz guaranteed the necessary funding
of the long-overdue project, the company was short of the production
A new plant therefore had to be erected without delay – either in
Ingolstadt, or in Zons, near Düsseldorf, where the company had already
acquired an industrial site. Fritz Böhm, at that time Chairman of the
Works Council and a member of the State Parliament, is said by former
colleagues to have "fought like a lion" to have the new factory built in
Ingolstadt. Thanks to his useful contacts with the world of politics,
the Free State of Bavaria was always "one step ahead" of North
Rhine-Westphalia. An investment loan of DM 25 million from the Bavarian
State Bank played a major part in the company's ultimate choice of
Another factor which argued in Ingolstadt's favour was the impending
collapse in business for two-wheelers: in view of plummeting demand for
motorcycles, there were plans to wind down DKW motorcycle production in
the short term. In contrast to the Zons location, there were
considerable numbers of qualified workers available in Ingolstadt – in
the late 1950s, a major consideration whenever a company was deciding
where to locate. In July 1958, construction work on the new plant in
Ettinger Strasse finally began. A sum of DM 76 million was invested here
in 1959, and a further DM 51 million in 1960. The regional newspaper,
Donaukurier, wrote euphorically: "One of the largest and most modern car
plants in Europe is currently being erected near Ingolstadt".