AMG prospersThe success of the AMG entry at the 1971 Spa race didn't go unnoticed. Customers who wanted more from their Mercedes-Benz models gave the company plenty of tuner work providing uprated engines, light-alloy wheels, bigger brakes, and tighter suspensions. In 1976, the company and its 40 employees moved to a larger facility in Affalterbach and increased the size of its staff. Meanwhile, Mercedes-Benz provided AMG with the occasional "special project," including preparing four 280E sedans for the 1977 London-Sydney marathon rally that were listed as private entries, but had significant support from the factory. The Mercedes-Benz entries prepared by AMG finished first, second, sixth and eighth overall in the grueling 19,000-mile event. Racing was still in AMG's plans, and in 1980 an AMG-Mercedes 450 SLC won a European touring car race at the Nrburgring in Germany.
A business of road carsAlthough AMG was well-established as a Mercedes race preparation company, its founders realized that the company's bread and butter would come from putting that racing image and heritage onto the street. It began developing a line of specialized road cars, stuffing big V8 engines into usually staid Mercedes-Benz body shells to create electrifying performance. First came the 280 CE 5.0 AMG in 1983 with a 276-bhp V8. In 1984, the company produced the 500 SEC AMG with four-valve cylinder heads that made 340 bhp, producing a car the size of a small cottage that would top 160 mph. In 1985, AMG opened its second factory and welcomed its one hundredth employee.
The company's next car, built in 1986, would forever sear the AMG name into American Mercedes-Benz lore. AMG took the midsize 300E sedan, pulled out its 177-bhp inline six-cylinder and filled its engine bay with a 5.5-liter V8 engine with four valves per cylinder making 360 bhp. It was wild, it was outrageous, it would accelerate to 60 mph in 5.5 seconds, and its top speed was better than 180 mph. It put serious sports cars like the Porsche 928 and Ferrari GTO onto the trailer, yet it was a practical four-door sedan that could take the kids to school and the dog to the groomer. American enthusiasts christened it the "Hammer" and the name stuck. Other Mercedes-Benz tuners were now on the scene, building their own versions of Mercedes-Benz fantasy, but the best known and most respected tuner remained AMG.
Back to racingAfter a mediocre season of world championship rallying with the big 500SLC coupes in 1980 (one win at the rough Ivory Coast Rally, two second places and two thirds), the Mercedes-Benz board again pulled the plug on official competition activities. This was unfortunate, as once again a new potentially successful racer was sitting in the wings. This was the new small 190E sedan, introduced in Europe in 1982 and to the United States in 1984. Its 2.3-liter four-cylinder engine made a usable 121 bhp, and its objective was to compete on the market with the BMW 3 Series. The small Mercedes was significantly enhanced in 1984 by the introduction of the 190E 2.3-16 whose 16-valve cylinder head designed by Cosworth helped the 2.3-liter four-cylinder engine make 167 bhp at 5800 rpm. The car was fast, handled well, and would have formed the perfect basis for a racing car, if only the parent company hadn't nixed all racing. Something had to be done.
Just as in 1971, Hans Aufrecht and AMG were ready to take the lead. In 1986, 190E 2.3-16 models were competing in the German Touring Car Championship (called DTM for Deutschen Touringwagen-Meisterschaft) with AMG engines, winning at the Nrburgring and at Avus. The 1986 season championship was won by a British Rover, but the 1987 championship went to BMW. This win by archrival BMW was the best thing that could have happened to AMG as suddenly a lot more "back-door" help was available from Mercedes-Benz, and in December 1987 Mercedes' board lifted the ban on racing as the company set its sights on the DTM.
The year 1988 was a big season for AMG and Mercedes-Benz in the DTM. The 2.3-16 engine was now producing 300 bhp at 8750 rpm, and AMG's efforts resulted in four victories (of the six competing Mercedes-Benz cars) and second place in the championship behind a turbocharged Ford Sierra. For 1989, the racing engine was significantly revised by Cosworth and AMG, growing to 2.5 liters with a shorter stroke and larger bore. Called the 190E 2.5-16 Evolution I, AMG won seven DTM races with it.