In the past someone has probably replaced the speedometer and replaced it with the wrong one. Mercedes W123 cars used several different speedometers depending on the engine and especially the rear axle ratio. Even if you have a speedometer that says 125 MPH as the maximum speed, there are still variations in 125 MPH speedometers, for example a 1985 W123 diesel car uses a different speedometer than earlier years despite the fact that prior year speedometers (1983 & 1984) look identical.

The best way to determine if you have the correct speedometer is to look at the part number of the speedometer at the bottom of the speedometer face. Call the dealer and ask for the correct part number for the speedometer for the year and model of your car, you will probably see a difference which explains the inaccurancies of your speedometer.

Unfortunately the only way to correct the situation is to replace your speedometer with the correct one with the correct part number.