By: Guy Solomon, Vice President of Strategy, Innovation, and Business Development at X Group Investing
The story of the German automotive giant, Mercedes-Benz, is legendary. One could say that even the best Hollywood screenwriters couldn’t have crafted a script as unique, exciting, authentic, and somewhat surreal as the tale of Mercedes-Benz. Few individuals have managed to effect such significant change, altering the course of the world within a short span and leaving a lasting impact. When the name “Mercedes-Benz” is mentioned, automatically, the names of the founders, Carl Benz and Gottlieb Daimler, come to mind. However, few are familiar with the story behind the tremendous success of one of the world’s most renowned brands. The journey of Bertha Benz, from Mannheim to Pforzheim, a journey that succeeded in transforming the automotive industry, was one of the significant factors in the success of Mercedes-Benz.
The Beginning and the Dreaming Child
The story begins like a fable, somewhere in the city of Karlsruhe, Germany. Carl Benz, born in 1844, lost his father at the age of two. He spent his childhood years in absolute poverty, yet his mother endeavored to provide him with the best education possible. At the age of 15, he passed the entrance exam to study mechanical engineering at the Karlsruhe Institute of Technology. Shortly after completing his studies, Benz underwent seven years of professional training at various companies, but unfortunately, he failed to integrate into any of them. In 1871, at the age of 27, Benz decided to return to the field he loved and knew best, mechanics and engineering.
He joined August Ritter’s workshop as a partner. The first year of the venture was extremely difficult, with economic hardships, professional disagreements, and, to top it off, Benz claimed that Ritter deceived him. Just before Carl Benz threw in the towel and surrendered to yet another failure, his wife, Bertha, decided to purchase August Ritter’s share in the company using her dowry. For six years, the Benz factory focused on engine development, but Benz suffered from a lack of business acumen until Bertha decided to take matters into her own hands.
The Journey that Changed the Global Automotive Industry
On the morning of August 5, 1888, without her husband’s knowledge, Bertha Benz took the “Model 3” and decided to travel from Mannheim to Pforzheim, a journey of 104 kilometers. Along the way, she encountered various technical and mechanical problems. During the journey, she improved the brake lining by instructing a cobbler to rivet leather onto the brake shoes. Upon reaching her parents’ house late at night, she immediately sent a telegram to Carl about her remarkable achievement. She was the first person to undertake such a long journey, long before the term became part of the global automotive lexicon.
Her intention was to prove to everyone, including her husband Carl, that the “horseless carriage” was the next big thing in transportation. And indeed, she demonstrated that long-distance travel could be safe, efficient, and fast with the Benz Motorwagen. The journey was a tremendous success, changing world perceptions.
During that time, it was challenging to sell motorized vehicles. The noise of the engine led many to believe it would explode at any moment. Cars moved slowly, were not allowed on main streets, and owners were required to have technical knowledge for operation and maintenance.
Years of Crisis and Wars
The ability to succeed over time depends on an individual’s or company’s ability to cope with major crises and emerge stronger. The Mercedes-Benz corporation faced significant crises. Immediately after World War I, the German industry and economy suffered greatly, and the company’s sales plummeted. In 1926, the merger with Daimler was completed.
The joint management successfully stabilized the company during challenging economic times. The company resumed growth due to new developments and advanced models. Between 1934 and 1939, Mercedes-Benz dominated the automotive world with a strong brand and racing cars capable of reaching speeds of about 200 km/h with the W25 and W125 models, which won 25 Grand Prix races.
Mercedes-Benz cars were highly regarded by the Nazi regime, which acquired the luxury model “Mercedes Benz 770”. When World War II began, the company’s factories shifted to producing submarines, tanks, armored vehicles, and aircraft engines as per the Nazi regime’s orders during those years. In 1942, Mercedes-Benz ceased private car production under the government’s directive as part of the war effort.
After the war, the company had to start anew and rebuild everything. Initial production focused on trucks, and in 1947, the company resumed private car production. In the story of Mercedes-Benz, there seems to be no war, economic crisis, or regime that could stop its engines. In 2022, the company ended with sales of approximately 2 million vehicles worldwide. Today, Mercedes-Benz is much more than an automobile company. The conglomerate owns Athlon leasing company, Mercedes-Benz Bank, financial services, insurance, credit, and investments. In 2009, the company acquired 9% of Tesla’s shares for $50 million. In 2014, it sold 5% for $780 million. In conclusion, one can summarize the success of the Mercedes-Benz corporation with a beautiful quote by Walter Elliot – “Perseverance is not a long race; it is many short races one after the other.” And this can be learned practically from the history of Mercedes-Benz. It is difficult to determine where the company would be without Bertha’s remarkable journey, her investment, or Carl’s great perseverance, and of course, the merger and faith in Daimler after World War I. One can look at the company’s journey and learn about the significant importance of faith, perseverance, and hard work on the road to victory.