THE DEALERSHIP SAYS THE CAR IS SAFE BUT THE REAR AXLES ARE WORN. THEY SAID SOMETIMES IT WILL MAKE NOISE SOMETIMES NOT.

THE DEALERSHIP WANTS $1700. TO FIX.

HOW INVOLVED IS THE JOB OF REPLACING THE REAR AXLES. ANY SPECIAL TOOLS?

OR DOES ANYONE KNOW A SHOP THAT WILL INSTALL THE PARTS (IN NJ) FOR A MORE REASONABLE PRICE. I KNOW THE PARTS ARE ABOUT $300 PER AXLE. 1989 300E, 140,000 MILES.

THANKS FOR YOUR INPUT.

Are they referring to the rear links? If that is the case there is a treat in this forum about the rear links. Do a search on your right upper corner under "floating 300E" or "rear links". A independant mechanic will charge ou a lot less $$$$$$. BTW, welcome to the forum.

Make sure it is not the flex disk's. They can make a clunking sound that sounds like its coming from the rear area.

Check this first before spending megabucks
 

Loose or disconnected rear suspension components. Check all mounting bolts, loose driveshaft bolts, Inspect all bolts and nuts and tighten to specification, worn or damaged universal bearings, worn or damaged flex plates, and centering sleeves, worn sliding sleeve splines. I would get 2nd opinion first. Good Luck

You might check the Yellow Pages under "Drive Shafts" for a specialist in your area.

You are about on target with the cost per axle assy. However, bad cv joints are more often associated with repetitive clicking or metallic snapping noises. Clunking noises are more frequently associated with differential or driveshaft problems. Swapping out the axles on a 300E is a doable DYI job. Make sure about you diagnosis. $1700 for both seems a bit high. The labor is not complicated.

Fix the thing by yourself. Get the shop manual. Mercedes typically don't require special tools to fix. The majority of repairs can be done with ordinary tools. The axles are a do it yourself job. It could be something else clunking like a flex disk on the driveshaft. Don't condemn the axles right away. Shake the living daylights out of the rear suspension and see if you find something else.
Also post the model and year of the car. Why not add it to your signature. Someone here will surely have the same problem and let you know how the solved theirs.
You got a lot of backup here.