FWIW our average mpg on the 98 E300 is 26.5. Best tankful I every got (all highway) was 30.6. And everything is in perfect working order. So there's nothing unusual about low 20's for all city driving.

Not sure where you got the impression of at least 25 city. There some people who boast of 35-38 highway on these cars...I just don't believe it.

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14 E250 Bluetec 4Matic "Sinclair", Palladium Silver on Black, 154k miles
06 E320 CDI "Rutherford", Black on Tan, 172k mi, Stage 1 tune, tuned TCU
91 300D "Otis", Smoke Silver, 142k mi, wastegate conversion

19 Honda CR-V EX 61k mi
Fourteen other MB's owned and sold
1961 Very Tolerant Wife