In 1995, MB decided to change the naming nomenclature of their cars. So, the "E" went from previously meaning fuel injected gasoline engine equipped mid-classed MBs ex: 260E, 300E, to "E-class" including the E320 gasser, E500, and the diesel E300D.

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'81 MB 300SD, '82 MB 300D Turbo (sold/RIP), '04 Lincoln Town Car Ultimate

Sooner or later every car falls apart, ours does it later!
-German Narrator in a MB Promotion Film about the then brand new W123.