Founder Ettore Bugatti was born in Milan, Italy, and the automobile company that bears his name was founded in 1909 in the town of Molsheim located in the Alsace region which was part of the German Empire until 1919. The company was known both for the level of detail of its engineering in its automobiles, and for the artistic way in which the designs were executed, given the artistic nature of Ettore's family (his father, Carlo Bugatti (1856–1940), was an important Art Nouveau furniture and jewellery designer). The company also enjoyed great success in early Grand Prix motor racing, winning the first ever Monaco Grand Prix.
Famous Bugattis include the Type 35 Grand Prix cars, the Type 41 "Royale", the Type 57 "Atlantic" and the Type 55 sports car.
Bugatti cars were extremely successful in racing. The little Bugatti Type 10 swept the top four positions at its first race. The 1924 Bugatti Type 35 is probably the most successful racing car of all time, with over 2,000 wins. Bugattis swept to victory in the Targa Florio for five years straight from 1925 through 1929. Louis Chiron held the most podiums in Bugatti cars, and the modern marque revival Bugatti Automobiles S.A.S. named the 1999 Bugatti 18/3 Chiron concept car in his honour. But it was the final racing success at Le Mans that is most remembered—Jean-Pierre Wimille and Pierre Veyron won the 1939 race with just one car and meagre resources.Ettore Bugatti also designed a successful motorised railcar, the Autorail (Autorail Bugatti).
The death of Ettore Bugatti's son, Jean Bugatti, on 11 August 1939 marked a turning point in the company's fortunes. Jean died while testing a Type 57 tank-bodied race car near the Molsheim factory.
World War II left the Molsheim factory in ruins and the company lost control of the property. During the war, Bugatti planned a new factory at Levallois, a northwestern suburbs of Paris. After the war, Bugatti designed and planned to build a series of new cars, including the Type 73 road car and Type 73C single seat racing car, but in all Bugatti built only five Type 73 cars.
A 375 cc supercharged car was cancelled when Ettore Bugatti died on 21 August 1947. Following Ettore Bugatti's death, the business declined further and made its last appearance as a business in its own right at a Paris Motor Show in October 1952.
After a long decline, the original incarnation of Bugatti ceased operations in 1952.
Bugatti's cars noticeably focused on design. Engine blocks were hand scraped to ensure that the surfaces were so flat that gaskets were not required for sealing, many of the exposed surfaces of the engine compartment featured Guilloché (engine turned) finishes on them, and safety wires had been threaded through almost every fastener in intricately laced patterns. Rather than bolt the springs to the axles as most manufacturers did, Bugatti's axles were forged such that the spring passed though a carefully sized opening in the axle, a much more elegant solution requiring fewer parts. He famously described his arch competitor Bentley's cars as "the world's fastest lorries" for focusing on durability. According to Bugatti, "weight was the enemy".