I'm considering getting the Dalan 1 1/4 inch for my 99 E300. Has anyone done any towing with the newer diesels? I have a hitch on my 83 300D and it tows a small trailer with ease and still gets 20 mpg. My daughter has the car now....so I need a towing machine since my wife has the ML 320 and refuses to give it up.

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99 E300 133K
98 ML320 99K
87 Saab 900 Turbo Conv 123K

Put a hitch on the 900 Turbo. I have an 88 900spg that tows small trailers without a problem. The mileage drops from over 30 down to about 24mpg towing about 1000lbs.
The 300D is way too new and nice to have an ugly hitch on it.
As far as heavy trailers, I'm guilty, I've towed a MasterCraft ski boat with a 78 Saab 99ems. The Saab engine pulled it fine, but,,,, even with four wheel disk brakes my emergency stopping distance would have been multiplied by infinity and taken to the depts of forever. Chances are the boat and trailer would be leading the car.
My point....3/4ton or heavier truck for heavy loads.