Maybe it's a lifecycle thing. MB has reached the point that succeding models are not or are only marginally more satisfying that the previous models. If you follow the S-class from the W111/2, you can see that there were measurable improvements from model to model (at least in terms of what's important to me). The curve flattened from the W126 to the W140 in terms of reliability and either flattened altogether or pointed down from the W140 to the W220.
As for Lexus, I think part of their success was handed to them by MB.
I wouldn't call the C-class junk, but it's not the value the 240D continues to represent. The 240D is not a scaled down 450SEL, rather it goes off on a tangent of providing value in simplicity and bulletproof reliability. How does MB figure that those are not qualities American buyers would pay a premium for today? Everywhere else in the world MB offers value models. Why not here? The thousands of 240D owners won't find anything of interest in an MB showroom today.
Should this thread be moved to the open forum?