The only purpose the exhaust system serves is to move the gases out the rear of the car, and to do so quietly. The turbo is just as happy with a short piece of pipe directing the flames away from heat sensitive bits.

I think that a 3" straight exhaust from the turbo back, out the rear of the car would be cool. The turbo sound will be awesome.

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83 300TD (need rear wiper assembly dead or alive)
84 300SD Daily driver
85 300TD almost 400k miles and driven daily.
98 E300D *sold
86 300SDL *sold and made flawless 10 hour journey to new home.