It is undoubtedly the case that until very recently a Mercedes was a much better car than a BMW. Certainly a W126 S-Class will enjoy much greater longevity than a 7-er from the same period.
As for the current model 7-er, we have run three, each for in excess of 60k miles with no problems whatsover. We also ran a current model 528i for a similar mileage, again, no problems at all. Our company has had about a dozen 3-er cars, mostly 4 cylinders and they too have performed flawlessly with nothing other than regular servicing being required.
The interior of the new model C simply is not up to the competition. Both the BMW 3-er and the new Audi A4 offer far, far superior materials and construction inside. Check out the very poor seat trim, smooth cheap plastic door pull, and smooth cheap plastic electric window switch surround of the C. You will not find anything even half as cheap feeling in the BMW or Audi, and probably not in an Alfa.
Similarly, the S uses cheaper plastics and trim than the 7-er cars. The X5 and the ML don't even bear compoarison, although granted an X5 is a pile off road.
I personally prefer the interior of the E-Class to that of the 5-er.
It gives me no pleasure to say this as I am a real fan of the Mercedes marque. However, the reality is that Mercedes long since shed its reputation for bullet-proof build and engineering at any cost.
1999 SL 500
1993 320 TE
1986 500 SEC