Nice car.

Sounds like you do have a MB alarm. The small barrel key which resembles a bike lock key is used to reset/deactivate the alarm. This can be useful where the alarm is malfunctioning, or the alarm fob batteries are flat and you have to open the car with the key.

Fit new batteries to the alarm fob for a start. If your alarm doesn't work, it has probably been deactivated. I'm sure somebody here will tell you where the little key fits if it doesn't tell you in your handbook. You may wonder why the alarm has been deactivated. In my experience, car alarms all fail long before the car does!

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JJ Rodger
2013 G350 Bluetec
1999 SL 500
1993 E300 diesel T
1990 190