What is considered Maybach's most outstanding design was created after Daimler's death in 1900. The first Mercedes caused a sensation at the Week of Nice racing event in March 1901. The vehicle stood head and shoulders above anything previously conceived of or built at Daimler-Motoren-Gesellschaft and it drew a line under the carriage era in automotive engineering.
Despite the great success of the Mercedes cars in the years that followed, Maybach was the repeated victim of scheming behind his back. He was replaced as Chief Design Engineer and his activities were reduced to the level of an "Inventors' Office". His acrimonious departure from DMG followed in 1907.
When the Zeppelin LZ 4 airship was destroyed in a storm in Echterdingen on 5 August 1908, Maybach offered to build Count Zeppelin a new improved airship engine. The resulting negotiations led to the creation of Luftfahrzeug-Motorenbau GmbH in Bissingen on 23 March 1909. Wilhelm Maybach's son, Karl, who also designed the new engine, became Technical Manager. In 1912, the company (renamed Luftfahrzeug-Motoren GmbH) moved to Friedrichshafen. Father and son each had a 20% stake in the company although Wilhelm Maybach placed the future of the business firmly in the hands of his son.
After 1922, luxury cars were also produced in Friedrichshafen. The crowning achievement of the product range was the 1929 Maybach 12 DS, the first automobile with a V12 engine and, along with its successor the Zeppelin, seen as the German answer to the Rolls-Royce.