The company was founded in as a manufacturer of aircraft engines , which it produced from to and again from to creating engines for aircraft that were used in the Second World War. In , BMW was the world's ninth-largest producer of motor vehicles , and the 6th largest by revenue, [ 3 ] with 2,, vehicles produced in that year alone. The name and Rapp Motorenwerke 's engine-production assets were transferred to Bayerische Flugzeugwerke in , who adopted the name the same year.
Following the end of World War I, BMW remained in business by producing motorcycle engines, agricultural equipment, household items, and railway brakes. The company produced its first motorcycle, the BMW R 32 , in BMW became an automobile manufacturer in when it purchased Fahrzeugfabrik Eisenach, which, at the time, built the Austin 7 under licence from Dixi. Throughout the s, BMW expanded its range into sports cars and larger luxury cars.
Motorcycles remained as a side-line and automobile manufacture ceased altogether. BMW's factories were heavily bombed during the war and its remaining West German facilities were banned from producing motor vehicles or aircraft after the war. Again, the company survived by making pots, pans, and bicycles. In , BMW restarted motorcycle production. The range of cars was expanded in , through the production of the cheaper Isetta microcar under licence.
Slow sales of luxury cars and small profit margins from microcars, meant BMW was in serious financial trouble and in the company was nearly taken over by rival Daimler-Benz. At least three of his enterprises made extensive use of slave laborers, as many as 50, in all. Life expectancy for laborers was six months. The relative success of the small BMW assisted in the company's recovery, allowing them to develop the New Class sedans.
The BMW M division released its first road car, a mid-engine supercar, in Also in , BMW introduced its first V12 engine in the i luxury sedan.
