On 24 January 1903, Karl Benz announced his retirement from active work within the company and took a seat on the Supervisory Board. Benz left the company in response to the Management’s decision to employ a group of French designers at the Mannheim plant with the aim of facing up to competition from Mercedes. This led to internal wrangling and, ultimately, Benz’s departure. His sons, Eugen and Richard, also left with him, though Richard returned to Mannheim in 1904 as Production Manager for passenger cars. By the end of the year, sales of Benz motor cars had reached 3480.

In 1906, Karl Benz founded the company "Karl Benz Söhne" in Ladenburg, which was jointly owned by himself and his son, Eugen. Having failed in their attempts to manufacture naturally aspirated gas engines, they directed their attention to vehicle construction. Approximately 350 "Karl Benz Söhne" vehicles were produced during the first quarter of the 20th century. In the meantime, the Benz family had relocated to Ladenburg. In 1912, Karl Benz left the company as a partner, leaving his sons Eugen and Richard to run the business alone. The company expanded further and branched out into other markets, for example into England where "Carl Benz Söhne" vehicles were often employed as taxis and where their reliability earned them great popularity. The last vehicle was built in 1923. Two 8/25 hp vehicles were assembled a year later, which Karl Benz kept for his own business and personal use and which have been preserved right up to the present day.

Gottlieb Daimler died in 1900 and did not witness the outstanding success of his invention. Karl Benz, on the other hand, was able to follow the motorisation boom and the ultimate breakthrough of his inspiration. He died on 4 April 1929 in his house in Ladenburg. Today this house is used by the "Karl Benz and Gottlieb Daimler Foundation" as their headquarters and as a location for a range of events.