• The races of 1937

Following the disappointing performance of the modified W 25 in its third season, Mercedes-Benz developed a new car for the 1937 racing year, the last season under the existing formula rules. As a foretaste of the innovation capability of the racing department in Stuttgart, in November and December, Rudolf Caracciola broke five international records and one world record in a Mercedes-Benz 12-cylinder streamlined record car on the new autobahn between Frankfurt and Heidelberg, comfortably passing the marks set by Hans Stuck for Auto Union on the same stretch of road the previous March.

The 1937 racing year was dominated by the eight-cylinder W 125 monoposto. The engine again included a mechanical supercharger, developing over 441 kW from a displacement of 5.6 litres. The W 125 was designed by an engineer just 30 years of age, who took over the new racing department in mid-1936: Rudolf Uhlenhaut. As well as developing new design concepts, Uhlenhaut also put his racing cars to the test personally. He succeeded in putting Mercedes-Benz back at the top of the European motor racing scene. The design included numerous innovations in matters of detail. For example, for the first time in a Silver Arrow the supercharger was downstream from the carburettor, so it was the final mixture that was compressed. This in-line eight-cylinder unit was the most advanced version of the Grand Prix engine that had been used since the 1934 season.

The backbone of the car was an ultra-sturdy frame of special steel with four cross members. The front wheels were steered by double wishbones with helical springs, as in the celebrated 500 K and 540 K production models. The wheels at the rear were mounted on a De-Dion double-articulated axle providing constant camber adjustment, with longitudinal torsion springs and hydraulic lever-type shock absorbers. Overrun torque and braking torque were transferred to the chassis by lateral links.

After extensive test drives on the Nürburgring circuit, Uhlenhaut opted for a revolutionary chassis design. He made the bold and visionary decision to replace the customary principle of hard springs and minimum damping with the exact opposite. The W 125 featured soft-sprung suspension and exceptionally long spring travel, with a high level of damping, setting the pattern for today's Mercedes-Benz sports cars. The external appearance of the car was very similar to its forerunner, the most distinctive feature of the W 125 being the three cooling openings at the front end. The car had free-standing wheels, with a streamlined chassis being used only for the very fast Avus race on 30 May 1937.

Success followed success during the 1937 season. Hermann Lang won the Tripoli Grand Prix, and also the Avus race, in an aerodynamically optimised W 125. His maximum speed of 271.7 km/h in that race was not bettered until 1959. Caracciola and von Brauchitsch finished in second and third places respectively in the Eifel race, and Caracciola claimed victory in the German Grand Prix ahead of von Brauchitsch. The latter took the Monaco Grand Prix ahead of Caracciola and Christian Kautz, with Goffredo Zehender in fifth place. The Swiss Grand Prix was a triple victory, with Caracciola, Lang and von Brauchitsch sharing the podium, and Caracciola finished first in the Italian Grand Prix ahead of Lang. Caracciola rounded off this record-breaking season with victory at the Masaryk Grand Prix in Brno ahead of von Brauchitsch. Despite driving a full complement of races for Auto Union, Bernd Rosemeyer was able to take only four wins. The superiority of the Mercedes-Benz team was also clearly illustrated by its drivers taking the first four places in the European Championship: Caracciola ahead of von Brauchitsch, Lang and the Swiss Christian Kautz. 1937 was both the high point and the end of the 750-kilogram formula, since a new set of rules came into force from 1938.

Along with their successes in formula racing, the racing department in Stuttgart also served up a string of victories in reliability trials and other competitions in the years up to 1938, particularly in touring car events. In 1934, Mercedes-Benz had won four gold medals with the W 150 in the '2000 Kilometres Through Germany' event. In subsequent years the company also competed in many off-road events with a series of vehicles based on the 170 V - the 170 VR, 170 VS, 170 SV, and 200 V.