Both have the M104 straight 6 engine, which is one of the best engines ever built by Mercedes in my opinion. They practically never wear out, never have oil consumption problems and don't suffer from valve guide or seal problems. Some have headgaskets that develop exteranl oil leaks, but other than that it is bulletproof.

96 has the 722.4 4 speed tranny with a hydro-mechanical control unit.

The 97 has the brand new (at the time) 722.6 5 speed elecetronically controlled auto with torque converter lockup clutch. Overall, I am going to say that it is an excellent transmission in its current production run, but there were some teething problems in the early builds of the tranny. Most people will tell you that you will be better off with the tranny in the 96, and they may be right. The 722.4 was in its last year of production and they held up pretty well. Also, it will probably be less than half for a rebuilt 722.4 as it would for a rebuilt 722.6.

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Ali Al-Chalabi

2001 CLK55
1999 Dodge Ram 2500 Cummins Diesel
2002 Harley-Davidson Fatboy
Merlin Extralight w/ Campy Record