I am about to fix a similar area in my car. I am going to cut out all of the rust, then butt-weld in a patch panel. I plan to do a pictorial on the repair and post it here. There are other ways to fix it, but I believe that this is the most permanent repair.

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1979 240D- 316K miles - VGT Turbo, Intercooler, Stick Shift, Many Other Mods - Daily Driver

1982 300SD - 232K miles - Wife's Daily Driver

1986 560SL - Wife's red speed machine