BMW AG originated with three other manufacturing companies, Rapp Motorenwerke and Bayerische Flugzeugwerke (BFw) in Bavaria, and Fahrzeugfabrik Eisenach in Thuringia. Aircraft engine manufacturer Rapp Motorenwerke became Bayerische Motorenwerke in 1916.

The end of the war hit BFw hard, since military demand for aircraft collapsed. The company’s management was forced to find new products in order to survive. Because aircraft were largely built from wood at that time, BFw was equipped with the very latest joinery plant and held enough stock of materials to build about 200 aircraft, which was worth 4.7 million reichsmarks. The company used the machinery and the materials in the production of furniture and fitted kitchens. In addition, from 1921 onwards, The company also built a motorized bicycle called the Flink and a motorcycle called the Helios. The Helios used a BMW M2B15 engine.

In the autumn of 1921 the Austrian financier Camillo Castiglioni first announced his interest in purchasing BFw. While most of the shareholders accepted his offer, MAN AG initially held on to its shareholding in BFw.
By the spring of 1922, Castiglioni bought MAN's shares in BFw, so that the company belonged exclusively to Castiglioni. In May of the same year, when Castiglioni acquired BMW’s engine business from Knorr-Bremse, he merged the aircraft company BFw into the engine builder BMW.
The name Bayerische Flugzeugwerke AG was revived in 1926 when Udet-Flugzeugbau GmbH was changed into a joint-stock company. In the early stages, BMW AG held a stake in this company and was represented by Popp, who held a place on the Supervisory Board. In time this company was renamed to Messerschmitt, an important and leading aircraft company for the Third Reich.
The engine manufacturer, which built proprietary industrial engines after World War I, was then bought by the owner of BFw who then