For the record, Hitler preferred Mercedes-Benz. Volkswagens were for the little people.

I had a Rabbit diesel for 5 years, concurent with my 1980 and 1983 300SDs. Both were enjoyable in their own ways. The Rabbit was cheaper to maintain. My best friend and I adjusted the valves on the Rabbit and changed the timing belt ourselves. It wasn't that difficult. My Mercedes seemed to cost me $1000 just for crossing the threshold of my Mercedes dealer. Because of the high cost of repairs, I was afraid to try and fix my Mercedes by myself, lest I break something. Once my extended warranty expired, and I quit taking it to the MB dealer for service, it became much cheaper to maintain.

With just the driver aboard the first generation Rabbit Diesels weren't that slow if maintained properly. The early 49hp engine liked to rev, while the 81 and later 52hp version ran out of breath earlier, but made more low end torque. Anyways, my Rabbit was quicker to 20 mph than my Mercedes but reached 60 about 2 seconds behind. The coefficient of drag on a Rabbit is exactly the same as the MB W123. Curb weight is about 1000lbs lower though, so they did get blown around a bit more.

My Rabbit was still running at 340k miles when my sister got rear ended in it. Up until my current 240d, I never kept a Mercedes for more than 130k miles. Sometimes I wish I'd kept my 83. I sometimes wonder if it's still on the road somewhere in the Pacific NW. It still looked and ran like new when I sold it. My Rabbit didn't look bad. The Leatherette upholstery only showed slight wear on the drivers seat. All and all they are both great cars, and I have equally positive nostalgic feelings for both of them.

For the money invested, the Rabbit was the hands down winner.

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1979 240D, 4spd manual, Power Sunroof, manual windows, 147k miles, Pastel gray/Black MB Tex.
1991 300D 2.5 - Smokes like it's on Crack!