Basically, your analysis is correct. Given current energy prices in the U.S., trading in on a diesel does not make economic sense. The fuel cost is such a small part of the overall ownership cost of an automobile that the opportunity for savings just isn't that great. It would take forever just to recover the sales tax you'd pay when registering the new diesel.

The big problem is that you'd be trading a (presumably) clean, low mile, well sorted 126 sedan for an unknown quanitity. If you budget what the 380SE will sell for, you'l be able to purchase a diesel sedan of about the same age with around twice as many miles.

Now, when looking for a new car I do somewhat prefer diesel. There are a couple of general reasons why. I find that MB diesel owners tend to take better care of their cars than gasser owners, in general. So it's easier to find a really clean old diesel than a really clean old gas car. I like all the low end torque a turbo-diesel supplies. I like the range - you can go for weeks without stopping to fillup. The savings in fuel costs is in there too, but it's pretty much bottom of the list.

Bottom line: keep your 380SE. Unless it doesn't meet your transportation needs or needs work that you are unwilling to invest in, I don't see it making sense to trade.

My $.02

- JimY