The BMW R 20 had the advantage of exemption from the requirement to pay tax and hold a motorcycle licence which had otherwise applied in Germany to all motorcycles more powerful than 200 cc since 1928. When this exemption was removed in 1938, a new motorcycle licence class was created for motorcycles up to 250 cc. The company designed the BMW R 23 to fill this niche, and the chassis and equipment for this motorcycle was based on the BMW R 20. Production of the BMW R 23 came to an end in 1940 and this was the last single-cylinder BMW from the prewar period. In 1948, it formed the basis for the design of the BMW R 24 when BMW recommenced motorcycle production after the war.