The Type 2 was a prototype automobile designed by Ettore Bugatti in 1901. It won an award at the Milan Trade Fair that year and gained the notice of the Baron de Dietrich. De Dietrich managed an automobile factory in Niederbronn in Alsace, France, and contracted Bugatti to develop new models for him under the De Dietrich-Bugatti marque.
Approximately 100 Types 3, Type 4 and Type 5 De Dietrich-Bugatti automobiles were produced from 1902 through 1904.
In 1904, Ettore Bugatti and Émile Mathis designed a new car, the Type 5 or Hermes. It was a prototype of a more-modern model with a four-cylinder engine and four-speed manual transmission. Chain drive was used. It went into production as the De Dietrich-Bugatti Type 6 and Type 7.