The roots of Daimler's competition involvement stretch back to the earliest days of motor racing. Benz & Cie. entered a car at the world's first motor race, the 1894 Paris-Rouen. The Daimler-Motoren-Gesellschaft's Mercedes cars won the 1908 French Grand Prix and swept the first three places at the 1914 French Grand Prix. Following the merger of Daimler and Benz in 1926 to form Daimler-Benz, the company focused for several years on road car development before re-entering Grand Prix racing with decisive intent.
When new Grand Prix regulations for the 1934 season limited car weight to 750 kilograms without restricting engine size, Daimler-Benz saw an opportunity. The German government under Adolf Hitler, keen to use motorsport as an expression of national capability, provided state funding to both Daimler-Benz and rival Auto Union to develop competitive Grand Prix cars. Both companies received 250,000 Reichsmarks annually, a sum that grew considerably over the following years.
The Mercedes-Benz W25 that debuted in 1934, like the Auto Union A-type, appeared in unpainted aluminium bodywork and was quickly nicknamed a Silver Arrow by the press — a label that applied to both German teams and persisted for decades. Initially competitive but not dominant, the Silver Arrows added roughly one litre of engine displacement and 100 horsepower per year, and by 1935 had begun to eclipse the Italian and French opposition almost completely.
Rudolf Caracciola became the leading Mercedes driver of the era, winning the European Championship — the premier title in Grand Prix racing before the Formula One World Championship was established — in 1935, 1937, and 1938. His chief rivals were Bernd Rosemeyer of Auto Union and, in the later years, Hermann Lang and Manfred von Brauchitsch among his Mercedes teammates, as well as Tazio Nuvolari, who drove for Auto Union from 1938.
The Mercedes-Benz W125 of 1937 remains one of the most powerful road racing cars in history. Its supercharged inline-eight engine produced between 560 and 595 horsepower in race trim, and in land speed record configuration a specially prepared W125 was timed at 432.7 kilometres per hour — a record that stood for eight decades. In the 1937 Grand Prix season the W125 won seven races to Auto Union's five.
For 1938, regulations introduced a maximum engine capacity of 3 litres for supercharged designs. Mercedes responded with the W154, powered by a V12 engine, which won four Grands Prix that year and allowed Caracciola to claim his third European Championship. In 1939 the W154's successor, fitted in both standard and updated form, continued the team's success. In response to a Tripoli Grand Prix run to 1.5-litre voiturette regulations — widely seen as an attempt to exclude the German teams — Mercedes built the W165 in just eight months. The car debuted at the 1939 Tripoli Grand Prix and won, driven by Lang and von Brauchitsch first and second.
The team was managed throughout the pre-war period by Alfred Neubauer, whose meticulous preparation, attention to strategy, and development of hand-signal communication between pit and driver set standards for professional racing management that influenced the sport long after his era.
Following World War II, Mercedes-Benz did not immediately return to Grand Prix racing. In 1952 the company re-entered competition with the gull-winged W194 sports car, winning the 24 Hours of Le Mans and the Carrera Panamericana. For the new 2.5-litre Formula One regulations introduced in 1954, the company developed the Mercedes-Benz W196, available in open-wheel and streamlined body configurations.
Juan Manuel Fangio transferred mid-season from Maserati to lead the team, and Mercedes recorded an immediate 1-2 victory at the 1954 French Grand Prix. Fangio won four races that year and the World Drivers' Championship. In 1955, Fangio and a young Stirling Moss won six of the nine championship rounds between them, with Fangio retaining the title. Mercedes also won the 1955 World Sportscar Championship with the 300 SLR.
Having demonstrated superiority in both disciplines, the company withdrew from all racing at the end of the 1955 season. The withdrawal is conventionally linked to the Le Mans disaster of June 1955, in which a Mercedes 300 SLR was involved in a collision that killed more than eighty spectators, though the decision to retire from racing had reportedly been made before that event.
Mercedes-Benz Rennstall defined what factory-supported Grand Prix racing could look like: state-of-the-art engineering, meticulous organisation, and a sustained commitment to technological superiority. The Silver Arrows nickname, first applied in the 1930s, was revived when McLaren adopted a silver livery in 1997 as a Mercedes engine partner, connecting the modern partnership to the pre-war legend. Alfred Neubauer's influence on team management methodology remained a reference point for Grand Prix racing decades after his retirement.