Mercedes-Benz competed in the next season with a revamped W 25. The 1936 version of the W 25, developing 330 kW and with a shorter wheelbase, was not however able to replicate this string of successes. The 1936 season brought only two Grand Prix victories for Mercedes-Benz, in Monaco and Tunis.
"Our Mercedes engineers have come up with something entirely new for the 1936 racing year. The car is smaller and shorter now. But its displacement is 4.7 litres, and the engine develops well over 420 hp," Neubauer summarizes. But the latest stage in the evolution of the W 25 could not pick up the thread of the successes of 1935. Mercedes-Benz managed only two victories in 1936, in the Grand Prix of Monaco and Tunis, both won by Rudolf Caracciola.
After the more or less average performance of the modified W 25 in its third season, Mercedes-Benz designed a new car for the 1937 racing year. The W 125 would dominate 1937 with its eight-cylinder engine in which a mechanical supercharger made for peak outputs of more than 600 hp (441 kW) obtained from a displacement of 5.6 litres. The W 125 was designed by Rudolf Uhlenhaut - an engineer who even impressed the stern racing manager Neubauer: "A genial young man has given our cars a new touch. His name is Uhlenhaut, and he is the only design engineer who ever knew how to drive a heavy Grand Prix car around a course at racing tempo with his own two hands."
The engineers relied on new detailed solutions. For instance, for the first time in a Silver Arrow the compressor was arranged downstream of the carburettors. That is to say, the supercharger compressed the finished mixture. The in-line eight-cylinder marked the highest stage of development of the Grand Prix power plant in use since 1934. The W 125 enabled Mercedes-Benz to move to the fore of European racing again. For the ultra-fast Avus race on 30 May 1937 it was fitted with a streamlined body. Hermann Lang won this race, as he did the Grand Prix of Tripoli. His average speed of 271.7 km/h on the Avus course was not beaten until 1959.