Unlike the systems used elsewhere in Europe, the German tax horsepower calculation took account both of the cylinder bore and of the cylinder stroke, and there was therefore a direct linear relationship between engine size and tax horsepower. In Germany tax horsepower, which had been defined by statute since 1906, was based on the dimensions of the cylinders in the engine. The "38" defined the manufacturer's claims regarding car's actual power output as defined in Horsepower#Metric horsepower (PS, cv, hk, pk, ks, ch). On the Mercedes-Benz 8/38 PS the "8" defined the car's tax horsepower, used by the authorities to determine the level of annual car tax to be imposed on car owners. The manufacturer applied the widely followed German naming conventions of the time. The new company's models for 1926 were unencumbered by an excess of technical sophistication, but came from a company with a long-standing reputation for quality: serious teething problems afflicting the early cars were the focus of conflict between Daimler-Benz Chairman, Wilhelm Kissel and the Technical Director responsible for the new models: Porsche's employment contract was not renewed beyond 1928, which led to an acrimonious litigation. It was developed in some haste under the manufacturer's Technical Director, Ferdinand Porsche in parallel with the smaller Mercedes-Benz W 01 (which never progressed beyond the prototype stage) and the larger three-litre-engined Mercedes-Benz W03 following the creation of Daimler-Benz, formally in July 1926, from the fusion of the Daimler and Benz & Cie auto-businesses. The Mercedes-Benz W02 was a midsize six-cylinder two-litre-engined automobile introduced by Daimler-Benz at the Berlin Motor Show in October 1926. 1,988 cc In line six-cylinder sidevalve engine
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