In addition to the increase in the numbers of tanks actually available, the practical application of this new force on the battlefield was also being developed. A report on 24 November 1938 gave the guidelines for the planned use of the Panzer Divisions which were to accomplish a number of primary tasks.
1. They were to be used at the most strategically important sectors and employed in mobile operations.
2. They were to widen and exploit breakthroughs created by infantry reserves.
By now the Army High Command envisaged that nine Panzer Divisions should be available by the Autumn of 1939. The report also made it clear that the Panzertruppen should consist of men that had the highest fighting spirit and that they were to be considered and developed as an elite unit, particularly with regard to their offensive spirit.
Back in Germany, during the autumn of 1936, two new Panzer regiments were formed, 7th Panzer Regiment in Veihingen and 8th Panzer Regiment in Boblingen. The 7th Panzer Regiment was temporarily attached to 1st Panzer Division and the 8th to the 3rd Panzer Division.
From September 14th to 29th 1937, large-scale manoeuvres of the Panzer units took place around Neusterlitz. These were the “Mussolini manoeuvres”, named after the Italian dictator who was present. The units involved were the complete 3rd Panzer Division and the 1st Panzer Brigade, from the 1st Panzer Division, who together fielded some 800 Panzer I tanks. On 12 October 1937 a number of new units were formed including the 10th, 11th, 15th and 25th Panzer Regiments, and Panzer Abteilung 65 along with the Panzer Lehr Abteilung. These divisions were earmarked to equip another potentially innovative formation, the Light Division. The habits of the old Cavalry Command died hard and the Light Division was designed to carry out a similar role to the old Cavalry Division in scouting - protecting the flanks of the advance. As such it was equipped with only one tank Abteilung comprising 96 tanks, rather than the two-regiment brigade of a full Panzer Division of 561 tanks.
On 12 March 1938 the Anschluss took Austria into the Reich. The only Panzer unit to take part was 2nd Panzer Division under the command of General Guderian. In preparation for the operation. SS Regiment Leibstandarte Adolf Hitler, commanded by Sepp Dietrich, was attached to the 2nd Panzer Division. The division covered some seven hundred kilometres in 48 hours, but rather ominously lost a third of its tanks due to breakdowns. Fortunately the 2nd Panzer Division was not involved in any combat. Following the Anschluss, Panzer Abteilung 33 was formed from the sole Austrian Panzer Battalion and other members transferred from German units. This unit was stationed in St. Polten. Panzer Abteilung 33 was assigned to the 4th Light Division and later to the 9th Panzer Division formed in Vienna in January 1940. As a result of the expansion of the Reich, the headquarters of the 2nd Panzer Division were now moved to Vienna, and the 3rd and 4th Panzer Regiments were stationed near the cities of Modling and Korneuburg.
The high command of the Wehrmacht join Hitler for the march past the new tank formations in Vienna. Right from the Führer; Generaloberst Keitel, Reichsführer der SS Himmler, Generaloberst von Brauchitsch, Generaloberst Milch, General Kraub and Reichsstatthalter Dr. Seyss-Inquart.