The Germans had alot of very good panzer divisions but over all most productive and most respected on the battlefield? possibly the SS Panzer divisions such as Totenkopf, etc. Not only did they tend to be fanatical and obey orders to the letter, Hitler and Himmler made sure they were always first in line for the best tanks and weapons. Whats more the officers tended to be the true believers, die-hard Nazis and motivated by ideology and chosen for their agressiveness and loyalty to Hitler. The SS even had a Hitlerjugend panzer division, composed of boys under 18, that was said to have been particularly aggresive to the point of recklessness.
The Panzer Lehr divison certainly deserves to be at the top of the list. It was an elite division formed in 1943 and equipped with the best equipment, tanks, men, etc. and fought very hard, sometimes to near the point of destruction.
With all these 'Elite' Divisions getting the best equipment one can only feel sorry for the poor sod's who got stuck with all the old stuff! If we go through the usual suspects listed as 'the best' you could say that the Panzer Force in Normandy 1944 was 'THE' best tank force ever to grace the planet! 1st/2nd/9th/10th/12th/17th SS and Lehr.
Could you possibly expand on that? I suppose the Panzer Lehr did come late in the war and as I said often fought near to destruction but I just figured I would mention it because of its elite status. And actually the 12th SS panzer division also suffered from the same problem, they fought extremely hard but often very close to destruction (especially during Goodwood and Totalize).
Both Panzer Lehr and the 12.SS were newly raised units that suffered catastrophic damage in Normandy. Both outfits ended the battle with only a few operational tanks and a few hundred armored infantry left. The rest of their combat elements were mostly killed, wounded, or missing in action. Both were hastily rebuilt with poorly trained personnel after Normandy and were built back up to only partial strength in armor, vehicles, and other weaponry. Their performance in the Ardennes offensive was generally unsuccessful. 12.SS gutted itself in the twin villiages and Panzer Lehr suffered heavy losses unsuccessfully trying to eject the 101st. from Bastogne.
Anyway, IMHO, from what I've read- these are the most accomplished and efficient Panzer divisions: 2nd Panzer, 6th Panzer, 21st Panzer, 2nd SS, 5th SS, the GD division
IMO 6th Panzer (Heer) takes the prize, it took part in most WW2 campaigns (though it was still called 1 Leiche in the invasion of Poland where it already had it's 11th Pz Regiment attached so it was a Panzer in all but name). Probably it's greatest claims to fame are due to the exploits of KG Von Huenersdorf and Heavy panzer regiment Bake that, while not officially 6th Panzer, were created mostly around 6th Panzer units. I also must admit have a weakness for the Pz 35(t) that was used mostly by this division. Second choice would be 2nd Panzer (Heer), another one that made it through the war, for it's exploits in Poland 1939 and the Bulge. Honorable mentions for single campaigns go to 3rd Panzer (Kursk aftermath) , 7th Panzer (France 1940) 11th Panzer (Chir battles) and of course 15th and 21th that formed the core of the Afrika Korps. IMO GD, while an outstanding unit, does not qualify as it was a PzG not a Pz unit for most of it's life. No SS unit makes the grade, the early performance was lacklustre and, apart from second Kharkov, most SS led battles were failures. If I had to pick one 9th and 10th would probably get the prize for the role in Market Garden despite being badly understrength at the time, being late war units they did not have the same bad early performance of the other SS unit (Extreme aggressiveness and green NCOs caused high losses compared to similar Heer units). Lehr was lavishly equipped and an extremely powerful unit but it's combat performance was average not outstanding.
The interesting thing about 6th Panzer is that it achieved a lot with inferior equipment. Even though GD and the SS divisions were labeled "Panzergrenadier" divisions, their structure and equipment was of a full Panzer division. I get the impression that the SS units often suffered enormous casualties in their operations. Even when the SS took down Kharkov, the 1.SS lost some 5,000 assault troops in something like a week. KG Peiper assaulted US forces in the Ardennes, and left 4,000 of his men there (wounded and dead) and retreated with 800. His force only got around 1,000 US troops to surrender. A portion of these were massacred and 200 of them were abandoned after his last stand. At Spring Awakening, the SS once again were defeated very quickly although they had a minor success at Gran. I don't get the impression that 9.SS or 10.SS were particularly good. They were average armored units before Market Garden and suffered high losses. In Market Garden, the Heer and FG troops contributed just as much as the SS so I do not really consider it a "SS" victory. Why is that? I know that it was built out of veteran personnel leading draftees. I haven't read Lehr Normandy operations in fine detail yet, but many of Lehr's accounts are of it being carpet bombed.
Kharkov was house-to-house fighting and as such totally unnecessary but Paul Häusser for some reason decided to go for frontal attack instead of surrounding the city and let the Red Army soldiers int he city starve until they surrender or are much weaker. probably though the reason why Häusser saved his life as he did not follow Hitler´s order in the first place and leave the Waffen-SS troops in the city for the red Army to crush. Peiper attacked until he ran out of gasoline and thus it´s a miracle he got back with any men. Simply another stupid operation by Hitler, not Peiper.They lost all the tanks etc that could have been used for defending the Reich and lots of men,too. the Spring awakening was another Hitler´s great inventions,. The tanks fell into the mud, the Russians knew to expect them and had prepared positions, so no idea to attack there either. Besides the waffen-SS was every time put to the toughest place so the huge losses are not that surprising. One should compare the figures with the opposite´s losses I think. Then you can say who performed more poorly. Besides, if you consider the German top officers there were loads who created huge losses but no real "victories", but men like Model and Schörner did stabilize the lines even with huge losses that were practically inevitable against the Red Army Colossus. I recall from reading about Model that Division Grossdeutschland men did not like him at all because he was putting GD always into the fire before other units. Jus some things that popped into my mind...
Of all the Panzer Divisions, the 5th Waffen SS Panzer Division 'Wiking' fought with distinction recognized on both sides of the line in the East. It earned the gruding respect of the Russians as noted in several of their battle reports. Felix Steiner was its commander for a majority of its existence. Another thing to note is that the 'Wiking' was made up, besides the command heiarchy, mainly of foreign volunteers. It seems that many point out the tremendous losses accrued by the Waffen SS divisions but given the tasks assigned to them, mostly high risk, it should not be surprising. As Kai has noted, compare their losses to those of the enemy in each specific engagement.
That's true after mid 1943 but while the SS units somehow stabilized to large armoured divisions and are best known for what they achieved in that role, GD continued to evolve until it became a corps sized formation, it was a panzer division for less than a third of it's existence and some of it's most famous battles, Stonne for instance, were fought when it was anything but a Panzer formation. IMO Lehr performed no better than the other panzer divisions in Normandy, considering the quality of the equipment it had it should have done better so it doesn't deserve a mention despite it's impressive TOE, I understand the question as "best" not "more powerful", if the latter you can hardly beat the nearly 20.000 men strong late war 1SS.
The one thing I do not understand is once many of these German divisions became half strength or less why did Hitler not consolidate them so they could become more effective instead of having all these divisions operating at far less than full strength? He seemed more concerned with having a higher quantity of divisions than having quality.
I believe that this is the answer to your question. Not only did he want the allies to believe that they were facing a stronger enemy just by the number of divisions facing them but in the end he ended up believing his own propaganda. My opinion.
It was obvious to anyone with common sense that the Germans were not going to outnumber the Russians or the Americans due to demographics. He had to be totally off his rocker.
AFAIK this was done for infantry units with the Divisongruppe (sp?) a 3 "regiment" unit where each regiment was actually the remnant of a division, but not with the panzers that were usually rebuilt. Contrary to infantry Panzers were usually pulled back to be rebuilt, "consolidating" such well known units would probably have been a blow to morale, the only instance I can recall was 27 Pz (that was never fully formed) whose remnants were absorbed by 7th and 24 Pz. On the other hand removing one tank batallion from a panzer division to strengthen another earmarked for offensive operations was done quite often.
But if it was done more often and on a larger scale it may have improved logistics a little bit thus improving morale.