The rivalry between the German luxury brands is as old as time, but Mercedes, Audi, and BMW came extremely close to operating under the same corporate umbrella. In fact, two of them were joined at the hip for several years before parting ways.

It all started in early 1958 when Mercedes' parent company Daimler-Benz green-lighted the acquisition of nearly 88 percent of Auto Union, the automotive conglomerate that owned Audi and three other brands. The latter had been around since 1932, bringing together Audi, Horch, DKW, and Wanderer under the same roof. Auto Union almost perished after World War II and was basically resurrected in 1949.

Daimler-Benz major stakeholder Friedrich Flickr came up with the idea of bringing Mercedes and Auto Union together. He believed the two would be a good fit by working together to achieve synergies and drive down costs. Less than two years after the two companies inked a deal, the luxury brand with the three-pointed star emblem acquired the remaining shares. The transaction effectively made Audi a wholly owned subsidiary of Daimler-Benz.

1959 could've been an even more important year in history had another deal between two German luxury brands gone through. Daimler-Benz was still out shopping, and it nearly bought BMW mere months after fully purchasing Auto Union. At BMW's Annual General Meeting in December 1959, "the sale of the company to Daimler Benz AG appeared to be already a foregone conclusion," according to a press release from BMW.

BMW was in dire straits during the late 1950s due to poor sales of both cars and motorcycles. That press release we mentioned goes as far as to say that it "was on the edge of financial collapse." Finding a new owner was seen by many higher-ups as a solution to save BMW from an even deeper crisis. Although selling the company to Daimler-Benz seemed to be a done deal, the transaction ultimately didn't happen.

"It failed with a last-minute reprieve as a result of committed small shareholders putting up spirited resistance to the restructuring plan that was part of the takeover."

Shareholders did not agree with the restructuring plan proposed by Daimler-Benz as they felt BMW and its employees had been undervalued. Consequently, BMW remained an independent brand, continuing to struggle in 1960 when major shareholder Herbert Quandt developed a restructuring plan. The new 700 kick-started a revival as sales started to pick up but it was the 1500 part of the Neue Klasse lineup that turned BMW's fortunes around.

While the deal with BMW fell through, Daimler-Benz still owned Auto Union, but not for long. On January 1, 1965, Volkswagen became the majority shareholder by purchasing 50.3 percent of Auto Union GmbH. In late 1966, VW bought the remaining shares, and merged Auto Union with NSU Motorenwerke in 1969 to create Audi NSU Auto Union AG. In 1985, it evolved into the Audi AG company we know today.

If you're wondering whether something came out of the Daimler-Auto Union tie-up, the answer would have to be yes. Daimler-Benz engineers from Untertürkheim were sent to Ingolstadt to work on a new four-cylinder engine. Designed in Stuttgart, the M118 debuted in an Audi-badged car in September 1965 as Auto Union's first car after World War II with a four-stroke engine. In addition, it was the first post-war vehicle to carry the four rings. It was simply called the Audi before being renamed Audi 72 for its output (72 PS).

As to what Daimler-Benz got out of the deal, Auto Union leased its facility in Düsseldorf in 1962. When Volkswagen acquired Auto Union three years later, Daimler kept the plant and still has it to this day. It's the company's largest van factory and the main plant for Sprinter assembly.

Mercedes W118 and W119 prototypes

There was also this compact sedan, internally codenamed W118. It had the aforementioned M118 carbureted engine, but it didn't evolve past the prototype stage. Mercedes also created a coupe variant, dubbed W119, but that one didn't see the light of production day either. The two were developed in 1962 with a front-wheel-drive layout. In December 1965, shortly before his retirement, Daimler-Benz's Head of Development Fritz Nallinger explained how the cars came to be:

"At the time, it was envisaged that this type - which, as mentioned, was already being tested by us - would possibly be manufactured by BMW or Auto Union. I am of the opinion that such a second car type, which can also be considered a catch-all type, must now [...years later] be constructed and tested again as quickly as possible."

However, it never happened. It wasn't until 1982 when the W201 came out as the entry-level Mercedes. Its modern-day equivalent is the C-Class (W206) but its positioning in the range is different since it's technically not a base model. It sits above a series of compact cars, including the A-Class Sedan and CLA.

The baby Benz duo from the early 1960s looked almost ready to hit the assembly line. It's  especially true when you consider the interior images of the W118 sedan show what appears to be a finalized cabin. The DKW F102 launched in 1963 wasn't all that different in terms of design. However, it lacked the four-stroke engine as it came with DKW's 60-horsepower, two-stroke engine.

Mere months after the DKW F102 was introduced as the last DWK-badged car ever, a decision was taken to switch from the outdated 1.2-liter, straight-three engine to the Mercedes-developed powertrain for future models. Depending on application, the more modern four-pot M118 had up to 89 horsepower and remained in production until 1972 when it was replaced by Volkswagen's own EA827. Its successor had an unusually long life since VW was still making cars in China with this engine in 2013.

It's impossible to know what would've happened had Mercedes owned both BMW and Audi today. All three German luxury brands have given us legendary models over the decades, and we're strong believers that rivalry is healthy. Competition pushes companies to do better and one-up their opponents to claim a bigger piece of the sales pie. In 2023 when cost-cutting measures are the norm, it's not hard to imagine a Mercedes reskinned as a BMW and/or as an Audi. Thankfully, that's not the case.

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