Sandeep,

I was in the same situation with my '91 420SEL - no reverse gear, but all forward gear shifting was working fine. (Started out as long delay time for reverse engagement, but eventually degraded to no engagement.)

As you have been advised, this is typically a worn-out B3 reverse clutch. My car, and also yours, I think, have 722.3 transmissions, and this is a pretty typical problem for them. (Prior 722.0 to 722.2 transmissions had an externally-adjustable B3 reverse band, instead of a clutch, so slippage in reverse could be easily adjusted.)

My car had 169,000 miles, and the mechanic advised that if I intended to keep the car a long time, it would probably be best to either do a total rebuild, or else install a "new" rebuilt transmission. I didn't intend to keep the car that much longer, though, so I opted for just the B3 clutch repair/replacement, assuming that everything else appeared to be in OK shape when the transmission was opened up. (Transmission needs to be removed and opened up to repair/replace the B3 clutch.) Mechanic said that things looked pretty good on the rest of the tranny, so we just stuck with the B3 repair, as well as routine replacement of seals as the tranny was being put back together. So far I have about 5,000 miles on the fixed transmission, and it is operating fine (in both directions!).

Cost for me was quite a bit higher than you are being quoted, reflecting the generally high prices in the San Francisco Bay Area. But, it was about the same 2:1 ration between a total rebuild and just the B3 repair. In my case, the two prices were $2,600 and $1,300 (US).

Good luck!

Bob Schleicher