The company was established first by August Horch and his first business partner Salli Herz on November 14, 1899 at Ehrenfeld, Cologne. August Horch was a former production manager for Karl Benz. Three years later in 1902 he moved with his company toReichenbach im Vogtland. On May, 10th, 1904 he founded the Horch & Cie. Motorwagenwerke AG, a joint-stock company inZwickau (State of Saxony). The city of Zwickau was the capital of the South Western Saxon County and one of Saxony's industrial centres at that time.
After troubles with Horch chief financial officer, August Horch founded on July 16, 1909, his second company, the August Horch Automobilwerke GmbH in Zwickau. He had to rename his new company because Horch was already a registered brand and he did not hold the rights on it. On April 25, 1910 the Audi Automobilwerke was entered in the company's register of Zwickau registration court. Audi is the Latin translation of horch, from the German verb "Horchen", which means "Listen" (compare English "hark"). The Audi name was proposed by a son of one of his business partners from Zwickau.
Both companies from Zwickau (Horch and Audi) were unified in 1932 with Zschopauer Motorenwerke J. S. Rasmussen (brand DKW) and the car producing piece of Wanderer to Saxony's Auto Union corporation. The Silver Arrow racing cars of the Auto Union racing team in Zwickau, developed by Ferdinand Porsche and Robert Eberan von Eberhorst, driven by Bernd Rosemeyer, Hans Stuck, Tazio Nuvolari, Ernst von Delius, were known the world over in the 1930s.