It's outside temp. Up front under the front bumper around where your license plate is there is a sensor that reads the outside temp. Your owner's manual will tell you that to test its accuracy you should place a thermometer right next to this sensor and see if you get a similar reading. You really can't compare it with those advertising signs that show outside temp becuase their thermometers are not under your car. I haven't seen an MB with an inside temp display, although some of the new one might have one.

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Jason Priest
1999 E430
1995 E420 - retired
1986 420SEL - retired