Even the most ardent Mercedes fan will admit that somewhere around the mid-nineties, the company lost its focus. Build quality slipped and complacency entered the corporate culture. The good news for everyone bar Mercedes' direct rivals is that the good times look as if they're on the way back. The Mercedes C-Class once again feels as if it's been irreversibly fused together by some force of nature rather than bolted, screwed, riveted and glued from a set of componentry.

The 212bhp engine that powers the Mercedes C320CDI we look at here is largely unchanged from the previous generation C-Class and if you're looking for the state of the art diesel powerplant in the executive sector, this isn't it. Mind you, it's still up there on the podium and unless you have a demand for the sort of acceleration that will have leave you with a neck like Iron Mike, the Mercedes is perfectly acceptable. After all, it's hardly slow, getting to 60mph in 6.7 seconds and topping out at 154mph. It just lacks the dizzying punch of the BMW 335d. Refinement is good with the powerplant making itself heard in the cabin only at engine speeds well beyond the power and torque peaks.

Mercedes makes great play of the C-Class' Agility Control package, a system that features smart dampers which adjust their characteristics depending on what sort of driving is going on. When cruising, these dampers reduce their damping force for a comfortable ride but when the car is driven dynamically, maximum damping force is instantly set, firming up ride and improving body control. There's no doubt that the motorway ride of the C320CDI is superb, refinement is excellent and steering response is also very good. Drive the car harder and it steps up to the plate to an acceptable level although the chassis is still a few degrees off the class best, the weight in the nose starting to become apparent with gentle understeer. The Mercedes brakes deserve special mention for acing BMW's best efforts.

The C-Class is notably bigger than its predecessor, 55mm longer and 45mm wider, but in a welcome buck against current trends, the car has become lighter. Mercedes has also moved the engine down and back, improving the car's weight balance.

"I'll stick my neck out and say that it it's better than a BMW 3 Series?"

Get into the C320 CDI and despite it offering a host of very modern features, it feels reassuringly familiar, many of the flat-planed surfaces and no-nonsense ergonomics harking way back to the 190E of the Eighties. Compared to some of Mercedes' more flamboyant efforts, it's a welcome throwback. Materials quality has improved massively over the previous generation model but perhaps the most interesting aspect about the design of the C-Class is that it does, in effect, offer two very distinct versions.

Go for the Elegance model and there's a very conservative look, with a traditional Mercedes grille and three-pointed star standing atop the bonnet. Specify the car in Sport trim and the car's front end looks very different with an aggressive underbumper assembly and the Mercedes badge incorporated into the grille in the style of the old SEC coupe.

The C-Class is notably bigger than its predecessor, 55mm longer and 45mm wider, but in a welcome buck against current trends, the car has become lighter. Mercedes has also moved the engine down and back, improving the car's weight balance.

The interior is supremely comfortable with decent storage space but there are a couple of ergonomic glitches. Specify the satellite navigation and it's impossible to shuttle between CD tracks or radio stations without navigating away from the visible map. There's also the issue of the voice guidance which may be too low in volume if you're listening to one of your favourite music tracks. The instinctive thing to do when the sat nav can't be heard over the music is to turn the music down. Do this while the voice command is in action and it merely reduces the voice volume yet lower. Annoying.

Mercedes also harks back to the old school when it comes to standard equipment provision. In the old days, you bought a Mercedes and thanked the dealer profusely if it came with a radio. These days things have progressed but it's still rather galling to buy a top of the line C320CDI and then be expected to fork out extra for items such as parking sensors and satellite navigation which are fitted as standard to shopping hatches a third of the C320CDI's price. Of course, Mercedes will argue that this policy allows owners to specify the car exactly to their own individual tastes and that the money has been spent on the things that matter.

Run an eye down the C320CDI equipment list and most of the more interesting fitments remain optional. These include the Harman Kardon stereo system, the Advanced Agility package with Sports Mode and the panoramic roof. Also on the options list are the intelligent lights, keyless go, and multicontour seats. What is fitted is a 7G-Tronic automatic gearbox that has two modes, sport and comfort. Switch it to sport and the car will drop two gears rather than the one gear in Comfort mode when you really mash the throttle.

The C-Class range opens with the SE model, identifiable by its black grille detailing and rear boot handle strip but the C320CDI doesn't come in this guise, one reason why prices start at £31,612. There are two variants, the luxury-oriented Elegance and the dynamic Sport. The Elegance features black dials and eucalyptus wood inserts as standard and the Sport features aluminium trim elements that rather cheapen the look of the otherwise excellent fascia. A multifunction steering wheel, ESP stability control and a multitude of airbags are standard on both models.

One area where the car excels is in fuel economy and I averaged over 42mpg on a motorway run on the test route from Valencia to Alicante. A combined fuel economy figure of 38.7mpg is a more representative figure, which is very good for such a powerful car that runs an automatic gearbox and is capable of comfortably seating four adults. Carbon dioxide emissions have also been capped at just 192g/km which will interest business user choosers as well as private buyers with a green conscience.

Drive the Mercedes C320CDI and you don't step out of the car raving about it. It's doesn't offer that big hit, the headliner attraction. Instead you'll emerge full of respect for what is a brilliant all round performance. You'll appreciate how Mercedes has finally managed to integrate technology that enables rather than annoys. You'll realise quite how far the company's engineers studied driver and passenger comfort and then brought those lessons to bear. You'll also give thanks to the way that the marketers left the engineers alone and vice versa. It's resulted in a very polished product.

People will always want to know if this car is better than a BMW 3 Series. I'll stick my neck out and say that it is. Unless you really want to extend the handling of your car beyond the 90th percentile (and how many of us get to do that on a meaningful basis these days?) the Mercedes works better on more levels for more of the time than the BMW. Job done.