The name "Setra" comes from "selbsttragend" (self supporting). This refers to the integral nature of the construction of the vehicles back in the 1950s when competitor vehicles still featured a separate chassis and body (often manufactured by separate companies). It is also possible that, with an eye to export markets, the company was mindful that for non-German speakers, the name "Kässbohrer" is difficult to pronounce. Until 1995 the firm operated under the name Kässbohrer-Setra, but in that year economic difficulties enforced its sale to Daimler Benz (between 1998 and 2008 known, especially in the US, by the name of its holding company Daimler Chrysler). Since 1995, Setra has been a member of the Daimler Benz subsidiary, EvoBus GmbH.
The North American distribution for Setra by Daimler is set to be partnered and taken over by Motor Coach Industries on April 25, 2012 as Daimler restructures its North American bus operations in 2013.
The first Setra bus, the Type S 8, so called because it contained eight rows of seats, was introduced in April 1951 at the German Internationale Automobil-Ausstellung. It featured a self-supporting body designed by Otto Kässbohrer, a concept now featured in most modern buses. Equally unusual at the time was the decision to locate the engine behind the rear axle; though the rear mounted engine configuration is another Kässbohrer-Setra innovation which subsequently became mainstream, simplifying the production process and creating a range of passenger focused possibilities both as to the level of the floor area in the passenger and driver/crew sections, and, where high floor layouts are specified, of the uses available for the underfloor area.