The origins of the firm go back to 1902 when engineer August Koch founded a workshop for dairy machinery in Kirschenallee in Darmstadt-Nord, which employed ten workmen. Two years later Koch went into partnership with master locksmith Johann Gräb to found the Molkereimaschinen- und Motorenfabrik Koch und Gräb. By 1904 the company was manufacturing four types of horizontal engines, the most powerful of which produced 10 horsepower, and employed as many as fifty workers. In August 1906 the partnership of Koch und Gräb was converted into the joint stock company Motorenfabrik Darmstadt, with the merchant Friedrich May providing additional capital and succeeding to the directorship of the company.
From 1908 the firm produced internal combustion engines of Solos design under license, as well as its own diesel engines of the ‘hot-bulb’ type. Sales would continue to expand in the years before the Great War and the company became a leading manufacturer of industrial locomotives, petrol and diesel engines for the automotive industry, as well as stationary engines for industrial use. During the war the demand for two-stroke diesel engines greatly expanded and new manufacturing facilities were built adjacent to the original factory in Kirschenallee.
Diesel engines became the most successful product of the company: This included the "RB" series, which it launched in 1925. With simple handling, the engines provided high performance with low fuel consumption and were used in particular as ship propulsion. The firm’s marine diesel engines found particular application in fishing trawlers, small naval auxiliaries, and from the middle 1940s, amphibious craft of the Kriegsmarine. Licenses for marine diesel engines were granted to firms in France, Poland, Italy, and Yugoslavia.
Agricultural tractors were also produced. During the Great War the company had developed its first model in 1916, based on locomotive principles. It was powered by a 20-horsepower single-cylinder petrol engine, which brought the vehicle to 2.5 or 5.5 kph. A much improved model was launched in 1924 under the name "Modag 1". This tractor was powered by a water-cooled, two-cylinder diesel engine of 16-horsepower, which brought the vehicle to a top speed of 8 kph. A third model, introduced in 1927, marketed as the "Modag 2", powered by a 20-horsepower diesel engine. The firm ceased development of its tractor line in 1931 to concentrate on diesel engine production.