Mercedes Mmm Class

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The advantage of more gears is that they increase performance and fuel economy, but it may take some drivers time to get used to it. To put the car into Park, for example, requires having to push in the shifter.

Off-road, despite its unibody construction and luxury personality, the M Class is surprisingly agile. With one touch of a button the all-wheel drive slips into off-road mode. The driver-activated "Downhill Speed Regulation" control uses antilock brakes and the throttle to help descend steep hills, and the optional height-adjustable air suspension lifts the vehicle up for better ground clearance.

Because the '06 M Class is longer and wider, handling is also improved. Thanks to its unibody construction, it rides more like a car than a truck. The ML500 comes with an adaptive damping system that lets the driver select—depending on road conditions and his or her inclinations—one of three settings: "normal," the slightly plusher "comfort" and the relatively taut "sport." The sport setting is particularly enjoyable and keeps the vehicle excitingly tight in curves.

Inside, the car is just as splendid. The cabin is roomy and much more luxurious than its predecessor, though such amenities will cost you even more. Sure, the ML500 has goodies like heated eight-way adjustable power leather front seats, real wood trim and chrome, infrared window wiper sensors, and dual-zone automatic climate control. But additional treats like satellite GPS navigation, a rear-seat DVD entertainment system, power tailgate, and even front cupholders will tack on nearly $10,000 to the price tag.

Fully loaded, the ML500 rings up at nearly $60,000, which is pricey, but still pretty good for a Mercedes. Bear in mind the 2007 Mercedes E350 wagon with 4MATIC has an MSRP of $56,475 before options.

BUY IT OR BAG IT?

Ah, if only the all-new ML500 had been introduced in 2005, it would have been a smash. In addition to making it look and drive better, Mercedes also seems (so far at least) to have worked out all the quality kinks that tainted the original M Class. There have been no recalls yet for the '06 model. It has scored top marks on the National Highway Transportation Safety Administration's front- and side-crash tests.

One way that Mercedes might be able to stoke sales is to bring over the diesel-powered M Class SUVs that it sells in Europe. The ML280 CDI and the ML320 CDI, slightly modified to meet U.S. standards, could provide Mercedes with a more fuel-efficient SUV to help lift its sales.

Fuel economy aside, there is only one other quibble we have with the M Class: It has no optional third-row seat. That may hurt its sales with families who simply require more seating room for themselves and their friends. (In fact, a friend of mine recently told me that was the only reason he didn't buy an M Class after the birth of his third child.)

Still, at this price point and luxury level, there are few other SUVs that can touch the M Class. The Porsche Cayenne and BMW X5 are also struggling in the salesrooms, even though they are comparably priced and deliver great driving performance and plush interiors (one exception is the top-line, very fast Cayenne Turbo S, which has an MSRP of $111,600).

Still, there might be a silver lining for Mercedes. If gas prices continue to soften, and if its engineers continue to develop more fuel-efficient engines, the M Class can still become the hit it deserves to be. For well-heeled drivers who want performance, style, and comfort (and can live with less-than-great fuel economy and without a third-row seat) the ML500 is a must.

To see more images of the ML500, click here.

Charles DuBow is director for new products at BusinessWeek.com.