Ferdinand Porsche BMW Dixie VW

In 1926 Daimler Motoren Gesellschaft and Benz & Cie merged into Daimler-Benz, with their joint products beginning to be called, Mercedes-Benz. Porsche's concept of a small, light-weight Mercedes-Benz car was not popular with Daimler-Benz's board, however. He left in 1929 for Steyr, but the Great Depression brought about Steyr's economic collapse and Porsche ended up being unemployed.

In April 1931 Porsche founded his consulting firm, Dr. Ing. h.c. F. Porsche GmbH, Konstruktionen und Beratungen für Motoren und Fahrzeugbau, in Stuttgart, where he returned. Porsche successfully recruited several old coworkers he befriended at his former places of employment including Karl Rabe, Erwin Komenda, Franz Xaver Reimspiess, and his son, Ferry Porsche. Their first project was the design of a middle class car for Wanderer. Other commissioned designs followed. As the business grew, Porsche decided to work on his own design as well, which happened to be a reincarnation of the small car concept from his days at Daimler-Benz in Stuttgart. He financed the project with a loan on his life insurance. Later Zündapp decided to help sponsor the project, but lost interest after their success with motorcycles. NSU then took over the sponsorship, but also lost interest due to the high tooling costs. After that, no one seemed interested in the project until Adolf Hitler made it his agenda to motorize the nation and that every German should own either a car or a tractor in the future.

In June 1934, Porsche got a contract to build three prototypes based on his design. The three cars were completed in winter 1936. Daimler-Benz was contracted to build an additional 30 prototypes. A new city, "Stadt des KdF-Wagens", near to Fallersleben was founded for the factory. The city is named Wolfsburg today and is still the seat of Volkswagen.

At about the same time, Porsche designed a racing car for Auto Union to compete with Daimler-Benz in Grand Prix motor racing from 1934 onwards. The V16-powered car became known by the name P-Wagen and was both innovative and successful. The dominance of the Silver Arrows of both brands was only stopped by the war in 1939.

Ferdinand Porsche became involved with the construction of the factory in Wolfsburg. He handed over his racing projects to his son, Ferry.

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