MERCEDES-BENZ'S REPUTATION

in the U.S. market is founded on stately, large sedans that announce their owners' wealth and, ahem, maturity. But the folks back in Stuttgart clearly envy the youthful trendsetters BMW attracts to its compact 3-series sedans, successors to the iconic 2002 of the late 1970s. The BMW blend of crisp handling, growling engines and macho exterior lines defines one of the most competitive segments of the auto market "entry luxury" sedans priced roughly between $30,000 and $40,000. Crowding the field are cars such as the Audi A4, Infiniti G35, Cadillac CTS, Acura TL and Lexus IS. There's not a bad car in this lot. If anything, the problem is that so many of these cars are chasing the BMW mojo they risk clich with lookalike black plastic and phony wood interiors.

Since 1983 Mercedes has challenged the 3-series with its compact C-class sedan. It's been a tough fight. The 3-series outsells the C-class by more than two to one, and the average 3-series buyer is younger and pays roughly $10,000 more for his car, according to data from the Power Information Network.

Now Mercedes is launching the fourth-generation C-class, which is slightly larger than its predecessor inside and out and comes equipped with more standard features. To cater to both loyalists and buyers attracted to flashier rivals, Mercedes is offering the C-class in two flavors. The Sport version will have a big Mercedes star embedded in the grille, body cladding designed by the AMG performance division and 17-inch alloy wheels. For traditionalists, the Luxury version of the C-class will come with a proper hood ornament and wood trim inside.

Mercedes is also overhauling its pricing strategy. Gone is the entry-level C230, which started at $30,425, replaced by the 2008 C300 Sport, which starts at $31,975, 5% more. Mercedes officials counter that with more standard horsepower and added standard features such as a power sunroof and eight-way power seats, the new C300 is a better value. Meanwhile, the C300 Luxury will start at $33,675, down $500 from the comparable 2007 C280. The C350 Sport will start at $37,275, down almost 4% from the outgoing 2007 C350 Sport.

2008 Mercedes C-Class

Base Price:

C300 Luxury: $33,675; C350 Sport: $37,275 (incl. destination charge)

MPG: Not yet rated

Standard Features: The fourth-generation C-class comes equipped with power sunroof, dual-zone climate control, Bluetooth connectivity and eight-way power seats.

Technology geeks will appreciate the seven-speed automatic transmission, a first in this class, which is standard on the 268-hp C350 and the 228-hp C300 models. Still, the C-class remains behind the 3-series and the Infiniti G35 in raw horsepower. Other technology available includes a navigation screen that slides up out of the dashboard and offers displays navigated by manipulating a knob on the center console.

On the road, the C-class is capable and comfortable. You don't carve turns; you glide through them with light, well-boosted steering and shocks tuned for comfort. The seven-speed automatic is smooth shifting, but what advantage it delivers over a six-speed is hard to discern in normal driving.

The 2008 C-class seems aimed at people who hunger to park a three-pointed star in the garage before hitting 50. But winning consumers not sold on the Mercedes mystique could be a challenge given the fierce competition for drivers looking for their first taste of luxe.