The engine used in the 3/20 was based on the Austin Seven engine used in the 3/15, but its crankshaft ran in plain bearings instead of roller bearings and had an 80 mm (3.1 in) stroke, generating a displacement of 788 cc (48.1 cu in).

[1] The new engine design also had a water pump and an overhead valve cylinder head.

[3][4] It inherited the 3/15 DA-4's independent front suspension and added a swing axle independent rear suspension, using a transverse leaf spring similar to that used at the front.

[1][4] Journalist and engineer Josef Ganz, who had criticized the 3/15 DA-4's suspension system in the magazine Motor-Kritik,[5] was contracted in July 1931 as a consultant in the design of the 3/20 AM-1.

[citation needed] Four versions of the 3/20 were built: AM 1, AM 2, AM 3 and AM 4, where AM denoted Automobil München.