When Mercedes went racing in the DTM with the 2.3-16 and later the 2.5-16 they found that the car was not competetive enough. Particularly against the BMW M3. So in 1989 Mercedes unveiled the 190E 2.5-16 Evolution I at the Geneva Auto Show.
As you can see the car is lower, has radiused wheel arches and a taller rear wing.
What you don't see is that the engine produces the same power ratings as the regular 2.5-16, but further up in the rev range via internal modifications. larger brakes, hubs, spindles, rims and tires were added and the inner wheelhouses were sourced from the R129 SL. Because of the homologation rules at least 500 street legal cars had to be produced to qualify the modifications for racing. Mercedes built exactly 500 for public sale (and reportedly 2 more to keep for themselves.
Comparing the 2.5-16 and the EvoI is similar to comparing the W124 300E to the W124 500E. In a word: significant.
Inspite of the dramatic increase in performance, the EvoI was still not as competetive as Mercedes-Benz wished. So, the Evolution II was introduced in Geneva one year later in 1990.
The obvious change is the aerodynamics package which was designed by master aerodynamicist Prof. Richard Eppler of Die Universitaet Stuttgart.
Widely panned (particularly by BMW)as being unsightly and over the top the EvoII bodykit was all about function. Having taken the engine to its maximum potential, M-B engineers felt that careful attention to detail would net some significant gains. They weren't wrong. The coefficient of drag ofa regular Mercedes 16v is 0.34. The EvoII's body kit resulted in a Cd of just 0.30. This was in addition to adding downforce.
This may not sound like much, but the dilemma is this: In order to reduce lap times, a race car needs to be able to enter and exit a corner at the highest possible speed while maintaining traction. Traction/grip can be enhanced through the application of Bernoulli's Principle inverted. The same physics that allow an airplane to fly can be turned upside down to generate downforce, and therefore traction, on a race car.
Here's the catch: normally, when you add downforce, you increase drag. Partially through the additional rolling resistance and friction of the tires pushing harder against the road surface and partially due to the greater surface areas interacting with the air. The EvoII body kit actually increases downforce and reduces drag.
Furthermore, there were three adjustable surfaces: a chin splitter at the front of the car that could be adjusted forward, an adjustable wing on the trunk surface and a third adjustable panel on the tall wing. These elements were used for fine tuning the aerodynamics and handling of the car. Through these three elements, one could actually change the setup from oversteer to understeer during a pit stop.
Additionally, a rear window spoiler was added to help direct the air coming off of the roof onto the rear wing. This rear spoiler drastically reduced the rearward visibility for the driver, but it also sidestepped the rule that stated that any wings could not impede the driver's rearward visibility.

Perhaps the most controversial areodynamic aid is the tall rear wing which is reminiscent on a Plymouth Road Runner or Ferrari F-40. Well the wing's design was not an accident. It is positioned where it is in order to raise the aerofoil out of the turbulent air behind the rear windscreen and into the clean airflow coming off of the roof where it will be more effective.
If you follow racing at all and understand the principle of drafting, then you'll understand the term "dirty air". This term is used to describe airflow that has been disrupted by the passage of a body through it. The effect of dirty air on aerodynamics is reduced downforce because of the turbulent air does not fllow evenly over the aerofoil. As an example of how undesireable dirty air is, consider these two demonstrations: Dirty air is why
1) the CLK-LMs flipped at LeMans and
2) Greg Moore's Indy car suddenly shot off the track at Fontana in what would prove to be a fatal accident.
But the changes are more than just skin deep: the radiator grille was blocked off to reduce engine compartment drag. It was decided that enough air came through the duct in the front airdam to cool the engine. flat bolt-on panels were attached to the undercarriage to smooth airflow under the car.
The styling still has its critics, but if you look at the bodykit, you'll see design elements that, to this day are being emulated:
the fender shape on the current DTM cars, the rear wing of the Subaru Impreza and Mitsubishi Lancer Evolution rally cars, etc.
Perhaps the most validating testament to the design of the aerodynamics package came from BMW: Some BMW bigwig reportedly remarked that if the body kit actually worked, then they (BMW) would build a new wind tunnel. Well...guess what BMW built.
Further engine and ignition modifications resulted in a 4 cylinder, 2.5L Naturally Aspirated 235hp monster. Keep in mind that this was the street version. A fully race-prepped EvoII engine generated somewhere in the neighbourhood of 340 HP.
Again, only 500 were built. and in spite of the DM70,000 price tag, all 500 were sold out within a week.