After being reduced to near ruin in the aftermath of World War II, Auto Union was re-founded in Ingolstadt, Bavaria, in 1949, ultimately evolving into the modern day Audi company following its takeover by Volkswagen in 1964 and later merger with NSU Motorenwerke in 1969.

Auto Union was formed in Germany in 1932[3] merging: In August 1928, Rasmussen, the owner of DKW, acquired a majority ownership of Audiwerke AG.

Auto Union chairman, Klaus, Baron von Oertzen, wanted a showpiece project to announce the new brand.

At the 1933 Berlin Motor Show, German Chancellor Adolf Hitler announced two new programs:[7] At fellow director's Adolf Rosenberger insistence, von Oertzen met with Dr. Ferdinand Porsche, who had done work for him before, and developed his own P-Wagen project racing car based on the new 750 kg (1,650 lb) formula.

They resembled the earlier Benz Tropfenwagen, also built in part by Rumpler engineers,[10] The only Grand Prix racers to wear Auto Union's four-ringed logo, they were particularly dominant in 1936.

Much has been written about the difficult handling characteristics of this car, but its tremendous power and acceleration were undeniable – a driver could induce wheelspin at over 100 mph (160 km/h).

The chassis tubes were initially used as water carriers from the radiator to the engine, but this was eventually abandoned after they often sprung small leaks.

The list of drivers for the initial 1934 season was headed by Stuck; he won the German, Swiss, and Czechoslovakian events, along with wins in a number of hill climbs, becoming European Mountain Champion.

Stuck won the Italian Grand Prix, plus his usual collection of hill-climb wins, again taking the European Mountain Championship.

For 1936, the engine had grown to a full 6 L (366 cu in), and was now producing 520 bhp (388 kW; 527 PS); in the hands of Rosemeyer and his teammates, the Auto Union Type C dominated the racing world.

In addition to the new 3 L (183 cu in) formula, 1938 brought other challenges, principally the death of Rosemeyer early in the year, in an attempt on the land speed record on a German autobahn.

The buildup and onset of World War II encouraged the development and production of special vehicles for military purposes in the 1930s.

[5] For the production of Junkers aircraft engine under license, Auto Union founded in 1935 the subsidiary "Mitteldeutsche Motorenwerke" (Central German Motor Works) at Taucha, northeast of Leipzig.

Horch works also produced the AWD heavy transport vehicle Type 801 (both named Einheits-PKW der Wehrmacht).

In 1945, on the orders of the Soviet Military Administration in Germany, the factories were dismantled as war reparations,[13] while the racing cars found stored in a colliery were returned to Moscow for reverse engineering.

The museum charts the early histories of Audi, Horch and Auto Union leading up to the company's reestablishment in Ingolstadt after WW2.

Thus a new Auto Union company was launched in Ingolstadt, Bavaria, with loans from the Bavarian state government and Marshall Plan aid.

The Ingolstadt facility had been run purely as a spare parts operation since 1945, but eventually the directors found the funding to restart production – initially in a converted granary building in the town.

With West Germany still in the early stages of rebuilding its economy after the war, the demand for cheap transport meant that only the DKW brand would survive into the postwar era.

Auto Union therefore continued DKW's tradition of producing affordable front-wheel drive vehicles with two-stroke engines.

In 1950, after a former Rheinmetall-Borsig factory in Düsseldorf-Derendorf was established as a second assembly facility, the company's first postwar car went into production: the DKW Meisterklasse F 89 P, available as a sedan/saloon, a station wagon and the four-seater convertible built by Karmann.

In response to pressure from Friedrich Flick, then its largest single shareholder,[17] Daimler-Benz acquired 87% of Auto Union in April 1958, taking complete control in the following year.

The DKW and Mercedes brands were able to establish a greater presence in the North American market by an agreement with the Studebaker-Packard Corporation in 1956 which through 1964 was the only distributor in the United States.

[citation needed] However, as prosperity began to return to West Germany, and as West German products gained valuable currency through export to the rest of Europe and North America, Daimler became increasingly worried that Auto Union's only market for its two-stroke products, without massive investment, would be impoverished East Germany.

In 1964, Volkswagen acquired the factory in Ingolstadt and the trademark rights of Auto Union, with the exception of the dormant Horch brand which Daimler-Benz retained.