From 1935 onwards the collective knowledge gained during the development and production of the Pz Kw III at last enabled the German tank building industry to finalise its own design ideas. No longer had it to rely on foreign inspiration, though Germany's ideas did sometimes prove complicated and did not always lend themselves to mass production.
According to General Guderian two types of armoured fighting vehicle were envisaged for Germany's new armoured divisions. The first would be fitted with an armour-piercing gun as well as bow and turret machine guns, and the second type would be a support vehicle, mounting a larger-calibre cannon. It was planned to equip the three light companies of tank battalions with the first of these two types. This was the vehicle later to become well known as the Pz Kw III.
There were certain fundamental differences of opinion on the question of arming the vehicle. The Weapons Department and the Artillery Inspectorate considered the 3.7 cm gun to be sufficient, while the Inspectorate for Mechanised Troops demanded a 5 cm gun. The infantry was already equipped with a 3.7 cm anti-tank gun and, for simplicity's sake, it was thought desirable to standardise on this single armour-piercing weapon. The installation of the more powerful weapon was therefore rejected at this time. But one important concession gained was that the Pz Kw Ill's turret ring would be of a diameter large enough to accommodate a much larger calibre weapon at a future date. The safe loading of German road bridges limited the combat weight of both new types to 24 tons, while a maximum speed of 40 kph was specified. The crew was to consist of five men--commander, gun layer and loader in the turret, with the driver and radio operator in the front of the hull. The commander had a central raised seat between the layer's and the loader's positions, and his own cupola allowing an allround view. Throat microphones were used both for inter-com and also for tank-to-tank communications .in the field.
In 1935 the Weapons Department issued development contracts for the Pz Kw III to MAN, Daimler-Benz, Rheinmetall-Borsig and Krupp.
A 15-ton vehicle was specified with the characteristics already mentioned. The Weapons Department's "concealed-purpose" name was Zugführerwagen/ZW (Platoon Commander's Vehicle). From 1936 onwards the prototypes were thoroughly tested and, as a result of these trials, Daimler-Benz were made responsible for the development and production. In contrast to that of the Pz Kw IV, this machine's suspension system showed the influence of the automobile industry, reflecting the Daimler-Benz tradition, in that torsion-rod springing was standardised in the Pz Kw III, from the fourth development model of the "ZW" vehicles onwards. Krupp's experience of locomotive building led to a coupled bogie suspension with longitudinal leaf springs in the Krupp prototype "MKA", which combined the design features of the "ZW" and the "BW" (Pz Kw IV) tank.
It is noteworthy that the selection of tank building contractors seems to have been made with little regard to experience in mass production on the part of the firms concerned. The conclusion which can be drawn from this is that no mass production of these tanks had been planned at that particular time. The two largest ear manufacturers in Germany at that time-Ford and Opel-were deliberately excluded from the tank programme because of their foreign connections.