On June 29, 1932, the State Bank of Saxony realized its investment in Saxony's car industry was in peril. It was then that Audiwerke, Horchwerke and Zschopauer Motorenwerke/DKW merged to form Auto Union AG.
This new entity then signed an agreement with Wanderer Werke to the purchase and lease Wanderer's automotive division. The new company chose Chemnitz for its registered office. The four ring logo that symbolized the merger still serves as the Audi logo to this day.
As a result of the merger, Auto Union AG became the second-largest motor vehicle group in Germany. Although Audi, DKW, Horch and Wanderer retained their brand names within the group, each was assigned a specific market segment: DKW for motorcycles and small cars, Wanderer for midsize cars, Audi for cars in the deluxe midsize segment, and Horch for luxury cars at the top end of the market.
To enhance its public profile, the new company decided in 1934 to enter motor racing at its highest level – Grand Prix events. Over the next few years Auto Union’s "Silver Arrow" cars won countless races, championships and created world records on racetracks in many countries around the world.