[1] By 1934 differently configured cabriolets, a sports roadster, and a Kübelwagen (military light utility vehicle) were added to what had become for Mercedes an unusually a wide model range.

[citation needed] With the economy still reeling from the successive after shocks that followed the Wall Street crash, Hans Nibel, the manufacturer's Technical Director, conceived of the 170 as a compact light-weight car.

Mercedes-Benz had by then become known as a manufacturer of large expensive cars that tended to grow larger and less affordable with each upgrade: the 170 of 1931 represented a conscious strategy of broadening the range down market, a pattern that would be repeated with the 190 in 1982 and A-Class in 1997.

The suspension layout, which minimized unsprung mass and provided a high level of stability, was subsequently introduced across the entire Mercedes-Benz range, giving the cars a quality of comfort and safety that competitors using the then common combination of rigid axles and leaf springing could not match.

Although both the innovative suspension and the compact chassis might have been seen as a gamble in 1931, their dependability and quality were reflected in the fact that they continued unchanged throughout the car's production run.

Power was transmitted to the rear wheels via what was in effect a four-speed manual transmission, on which the top gear operated as a form of overdrive.

Fuel economy was quoted as 11 litres per 100 kilometres (26 mpg‑imp; 21 mpg‑US) and top speed 90 km/h (56 mph), which combined to represent a competitive level of performance in the passenger car market of that time.

[1] Subsequently, differently configured cabriolets, a sports roadster and, for military use, a Kübelwagen were added to what was, by 1934, a wide range of standard body types offered.