The story starts 60 years ago, when Daimler acquired a majority stake in Auto Union at the request of Friedrich Flick, who pushed for a merger between the two companies. Flick was a major shareholder in both automakers and used his influence to set up a deal as he believed the companies had products that would complement each other.
Daimler-Benz AG acquired nearly 88 percent of Auto Union and would eventually purchase the remaining shares on New Year’s Eve in 1959. As this was happening, Auto Union was constructing a new plant in Ingolstadt and eventually decided to move its entire production capacity there. Daimler ended up leasing the old Auto Union factory in Düsseldorf before it was eventually sold to one of its subsidiaries in 1962.
Auto Union used the funds from the factory sale and an additional 340 million Deutsche marks from Daimler to modernize its lineup. To assist with the process, Daimler sent one of its most capable engineers to Ingolstadt in 1963. Ludwig Kraus didn’t come empty handed as he brought a team of employees and a nearly complete four-cylinder engine dubbed the M 118.
This was a miracle for Auto Union, as the company was only producing two-stroke engines at the time. The new engine would eventually debut in the first post-war Audi which was introduced in 1965.
Daimler eventually sold its stake in Auto Union and the company became a wholly-owned subsidiary of Volkswagen in 1964. However, Daimler says their influence remained as Kraus became the company’s technical director and was familiar with a number of Mercedes models that were under development. The automaker went on to say its’s “not surprising that the body of the first Audi 100 developed at Auto Union shares features with the W 119″ as well as the Mercedes-developed engine.