[2] In 1940, a number of these vehicles were taken over by the Germans after the Fall of France and employed as the Panzerspähwagen P204 (f);[2] for some months after the June armistice, production continued for the benefit of Germany.

In 1933,[2] one of the competing companies — the others being Renault, Berliet and Latil — which had put forward proposals, Panhard, was allowed to build a prototype.

Of all the competing projects, it was considered the best: the Berliet VUB e.g. was reliable but too heavy and traditional; the Latil version had no all-terrain capacity.

After complaints about reliability, such as cracking gun sights, and overheating, between 29 June and 2 December 1937 a new test programme took place, resulting in many modifications, including the fitting of a silencer and a ventilator on the turret.

[2] The final assembly and painting of the armoured cars took place in the Panhard & Levassor factory at the Avenue d'Ivry in the 13th arrondissement of Paris.

There, however, only the automotive parts and lesser fittings were built in: the armoured hull was in its entirety prefabricated by forges serving as subcontractors.

They were scheduled to be delivered between January and July 1938, but due to strikes and delays in the production of the turrets, the actual dates were 24 June 1938 and 10 February 1939.

The monthly deliveries were: nine in September 1939, eleven in October, eighteen in November, twenty-two in December, twenty-five in January 1940, eight in February, sixteen in March, thirty-four in April and a final thirty in May 1940.

Total hull production of all versions had been: 24 in September 1939, 26 in October, 27 in November, 33 in December, 36 in January 1940, 40 in February, 32 in March, 42 in April, 32 in May and 24 until the interruption in the middle of June.

When war really broke out, it was soon realised that the need to raise new units, the replacement of older, worn out vehicles and the creation of a matériel reserve to compensate the loss of about 20% of the cars of a combat unit per month during a campaign, would necessitate a much higher production level, even when resorting to the expedient of fitting surplus hulls with older turrets.

It had been planned on 10 October 1939 to bring production to forty per month in March, fifty in July, fifty-five in September and sixty from November 1940 for the duration of the war.

Steering could be switched into reverse immediately to allow the assistant-driver, facing the rear[2] and seated to the left of the engine (or, from his point of view: the right), to drive the vehicle backwards in case of an emergency, using all four off-road gears, with a maximum speed of 42 km/h.

In the electrically traversed APX3, the commander on the right and gunner on the left benefited from a rudimentary turret basket, and sufficient vision devices including one periscope (which were of the Gundlach type on late examples) per man and PPL.RX.168 episcopes.

Experience showed that the type had several shortcomings: a weak clutch, slow turret rotation, a cramped interior, unreliable radio sets, poor cross-country drive and very noisy brakes.

From about the 111th vehicle (or fourth production batch) onward, several changes were introduced, including the fitting of an armoured ventilator covering on top of the turret, a factory plate with the name "Panhard" on the nose and a new softer factory camouflage pattern with the brown and bronze green spots no longer separated by black lines.

[13] From the 270th vehicle onwards stowage boxes were constructed on the back fenders, obscuring the pointed form of the engine compartment.

It was in fact the renamed 4e GRDI (that would be replaced by a new unit of the same name in its former parent 15th Mechanised Infantry Division on 5 May) and was equipped with thirteen Panhard 178s.

[15] During the Battle of France from 10 May 1940, on which date about 370 completed vehicles were available,[11] the Panhard 178s were allocated to reconnaissance units of the mechanised and motorised forces.

[15] After the start of the invasion, several emergency ad hoc units were formed; these included the 32e GRDI for the regular 43e DI, having five Panhards.

In the case of 1DLM, this entailed a movement well in advance of the main body of the division as it was supposed to maintain a connection with the Dutch Army during the Battle of the Netherlands.

They were asked by the Dutch to assist an infantry attack on the southern bridgehead of the strategic Moerdijk bridges, held by German paratroopers.

While thus being immobile, this group of Panhards was surprised in open polder landscape by a Stuka-attack with one vehicle disabled and quickly withdrew to the south.

The North African forces were in need of two reconnaissance armoured car types: a light one, for which role the Laffly S15 TOE was envisaged, and a heavy one, the automitrailleuse lourde, for which the Panhard 178 was chosen.

Initially it was planned to uparm the vehicle, at first with a 37, then a 47 mm gun, but on 14 January 1939 the quickly deteriorating international situation forced the acceptance of a variant, the AMD 35 type Afrique française du Nord, not very different from the standard version: apart from small internal fittings changes, the main difference was the installation of a heavy duty radiator, better adapted to the hot desert climate of the North African colonies.

Construction on the vehicles started in December but had to be halted due to a lack of the special radiators, 161 of which had only been ordered on 10 October; eventually, they were manufactured from the second week of May 1940, at this time forming the main bulk of Panhard 178 production: 78 were delivered that month.

[8] None of these vehicles would in fact be shipped to North Africa; they were used by newly raised (especially 10e Cuirassiers, part of Charles de Gaulle's 4e DCR), reconstituted or ad hoc-units in France.

To provide enough room to operate the larger gun, the back of the new octagonal turret was raised, resulting in an extreme wedge-shaped profile.

[17] After 1941, the Germans modified 43 cars as railway-protection vehicles (Schienenpanzer); they could drive on the tracks themselves by means of special wheels and were fitted with large radio frame aerials.

[17] In 1944, some of the 34 Panhards captured by the Germans when they overran Vichy-France in November 1942, were rebuilt with the 50 mm L/42 or L/60 gun in an open-topped turret and used for occupation duty.

[18] The type with the new turret, a new four cylinder engine and the EM3/R61 radio set was named Panhard 178B and taken into production at Firminy; a first order of 150 was made on 5 January 1945 and confirmed on 31 July 1945.