The second generation C-Class was introduced in 2000, with a sportier look than the previous generations, with a steeper front-end and shorter rear-end. The styling cues were similar to that of the W220 S-Class. The sedan debuted with a range of straight-four and V6 gasoline engines and straight-four and straight-five Diesels. Most of the engines were carried over from the W202, but the C 320 was exclusive, offering 218 hp, also the C240 now had 2597 cc but output was unchanged at 170 hp. The diesels now featured common rail direct injection and variable geometry turbochargers. Six-speed manual gearboxes were now standard for nearly the entire range (except the C320 and C 270 CDI). For the first time, the number designations were no longer equivalent to the engine displacement, more specifically in the C 180 (2.0 L), C 240 (2.6 L) and C 200 CDI (2.2 L).
In 2001, Mercedes increased the range, with the introduction of the new T-Modell station wagon and Sportcoupé. The Sportcoupé was a three-door liftback made to counter the BMW Compact, but like its competitor, it proved unpopular with the younger buyers it was targeted towards, due to high prices compared to the lower entry-level models it was competing against, and unfavorable exchange rates. Although removed from the North American lineup in 2005, it continued on sale in other markets. From October 2000 until 2007, a total of 230,000 Sportcoupés were built in the Bremen factory and in Brazil. In Canada, it was replaced by the Mercedes-Benz B-Class. A new family of supercharged four cylinder engines, dubbed M271, also debuted. All of them used the same 1.8 L engine, with different designations according to horsepower levels, including a version powered by natural gas. The 193 PS(142 kW/190 hp) C 230K was initially available only in the Sportcoupé. 4MATIC four wheel drive versions were also offered for the C 240 and C 320.
The C-Class was refreshed in early 2004. In this year, the interior styling was changed in all three body styles. Different taillights were added to the Sportcoupé and several all-new M272 and OM642 V6 engines were introduced later in the year. These were available in both petrol and diesel configuration, ranging between 2.5 L and 3.5 L, and the three-valve twin spark design was replaced by the more standard four-valve design, now with variable valve timing. The C 350 could now reach 272 PS (200 kW/268 hp), while the C 320 CDI was good for 224 PS (165 kW/221 hp). In addition, these engines also received the new seven-speed 7G-Tronic automatic transmission as optional, the diesel four cylinder's power was slightly increased, and a more economical naturally-aspirated 1.8 L (C 160) was added to the Sportcoupé lineup.
The C-Class is arguably one of the most popular automobiles in its class in many of the European markets. The second generation was for a long time after its release the second most popular new car in the German market, right after the Volkswagen Golf, and in 2002 it achieved success in the field of safety by scoring the maximum five stars in a EuroNCAP crash test. In the United States, the C-Class automobiles are the least expensive of the Mercedes-Benz lineup as the A-Class was not imported there. However the W203 C-Class did acquire a poor reputation for reliability compared to other Mercedes-Benz models, an area which was targeted for improvement in the replacement model.
The last W203 C-Class sedan was produced on December 14, 2006 at the Sindelfingen plant, after almost 630,000 units of the sedan were produced.
By the revision of the C-Class in 2005, C 32 AMG was also replaced, giving way to a new 5.5 L naturally-aspirated V8-powered C 55 AMG. This was an evolution of the V8 engine found in the previous E-Class, with power raised to 367 PS (270 kW/362 hp) at 5750 rpm and torque climbing to 510 Nm (376 ft•lbf) at 4000 rpm. Unlike the less-powerful V6s and V8s in the rest of the Mercedes-Benz lineup, it continues to use Speedshift five-speed automatic. Though maximum speed is still limited to 250 km/h (155 mph) and 4.9 seconds from 0 to 100 km/h (62 mph) is not improved, this model is considered the sportiest AMG model in the C-Class history before the recent release of the W204 (third generation) C63 AMG.
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