The most notable retreat and regroup occurred in early 1943, which would culminate in a German counter-offensive that would later be termed the Third Battle of Kharkov.

To review the situation: The Soviet Army had just encircled the German 6th Army at Stalingrad, and were crushing further Axis armies (notably the 2nd Hungarian Army) to threaten a much larger encirclement. Worse, a good deal of the German forces - notably 1st Panzer Army - was deep in the Caucasus region and essentially had their main retreat route through Stalingrad cut off.

What occurred was a desperate series of battles and retreats, which allowed the extrication of 1st Panzer Army from the Caucasus via Rostov (which was later abandoned). Much of the credit is often given to Manstein, who was overall commander for the retreat and the eventual counter-attack, but recent research has revealed that a lot of the credit also has to go to his subordinates. One Divisional commander - Balck - commanding a very ordinary "11th Panzer Division" - fought an entire Soviet Tank Army to a stand still along the Chir.

With 1st Panzer Army recovered somewhat intact and further reinforcements from France, the Germans were able to counter-attack and smash three Soviet armies; while recovering the rail hub at Kharkov. However, this campaign was largely forgotten as it coincided in large part with the surrender of 6th Army at Stalingrad.