Definitely leather. Now go out and by some lexol and keep it looking new.

Leather has actual stitching rather than simulated stiching, and the pleats are deeper - like your seats. The pleats run the length of the seat regardless of material.

Nice car from the looks of it.

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1982 240 D, 308,000 - 321,127 miles (sold)
1982 300 TD,166,500 - 226,000 miles
1998 E 320, 120,000 - 144,000 miles
2005 C 230 K, 26,000 - 77,000 miles (sold)