The Good: The 2006 Mercedes-Benz E350 features a sophisticated engine and transmission, while the cabin offers an auxiliary jack for an MP3 player, options for navigation, and a decent sound system. The Bad: Only Mercedes-Benz's cell phone can be integrated into the 2006 E350, and the EPA-rated city mileage isn't great. The Bottom Line: Mercedes-Benz's new engine, transmission, and electronic options keep the 2006 E350 in the benchmark position for the midsize luxury-sedan class. 2006 Mercedes-Benz E350The 2006 Mercedes-Benz E350 replaces the E320 in the E-Class line, which makes up the heart of Mercedes-Benz models, offering good luxury and quality at a less-than-stratospheric price. Although its external appearance is largely unchanged, the name is new, and there are more significant differences between the 2006 E350 and last year's E320 than an additional 300 cubic centimeters. Two of the most important components of the 2006 Mercedes-Benz E350--the engine and the transmission--are completely new. Although it produces noticeably more power than the old engine, there is no real reduction in fuel economy, thanks equally to the new engine's improved design and the new transmission's seven speeds and sophisticated electronic controls. Additionally, both the standard CD player and the optional in-dash six-disc changer play MP3 CDs. If six CDs' worth of MP3s isn't enough music for a long journey, open the glove box and plug an MP3 player into the jack--an unexpected bonus we also saw with the Mercedes-Benz ML350.Our test car was rather simply equipped, with only pewter paint ($680), stone leather seating ($1,500), a six-disc CD changer ($420), heated front seats ($680), and the $1,550 Sunroof Package (a glass sunroof, a power rear-window sunshade, and manual rear side-window blinds) added to its $50,050 base price and $775 destination charge. In lieu of the Sunroof Package, we would have preferred the 526 Premium Package, which at $2,950 includes the glass sunroof and sunshades, along with navigation, a Harman Kardon Logic7 surround-sound stereo system, and heated front seats. Other worthwhile options are the $990 Lighting Package, with Xenon HID headlights that provide corner illumination and heated headlamp washers, and Sirius Satellite Radio at a $500-plus subscription. The contemporary interior design of the 2006 Mercedes-Benz E350 admits plenty of light for a spacious feel, and the standard burled-walnut trim with chrome binding provides a touch of old-world elegance. Darker material on the top of the instrument panel reduces glare. As has been the Mercedes-Benz standard for many years, the seats are firmly padded for long-term comfort. They are power-operated by means of iconic switches, a Mercedes-Benz innovation from long ago. Most controls are well marked and intuitive to use. The Command interface offers useful buttons for access to the car's functions, but the stereo doesn't read ID3 tag information from MP3s.Mercedes-Benz's Command system is the interface to the audio controls, as well as to the navigation and telephone systems if those options are included. It also displays service information. Its screen is positioned in the middle of the center stack, where it is protected from glare and can be seen well, even with polarized sunglasses. Application selections are made from marked hard buttons to its side, with context-sensitive soft buttons adjacent to the screen controlling functions for each application. Since our test car was simply equipped, without the navigation system or Mercedes-Benz proprietary cell phone, Command control was correspondingly simple. CD track selection for a single CD may also be controlled from the steering wheel, as well as by individual track numbers entered via the phone keypad. Our only disappointment with this system is that it doesn't display ID3 tag information from MP3 CDs, forcing us to decipher sometimes esoteric filenames.The 2006 Mercedes-Benz E350's CD changer is well hidden. It can be found by touching an unmarked button in the center of the controls below the Command screen. Press that, and the wood-faced panel moves forward and up, exposing the changer. The CD slot is perilously close to the shift lever in Park, so care must be taken when loading or unloading discs. The whole unit may also close if a disc is not inserted quickly enough, possibly damaging the disc in the process. Also, the manual warns that audio CDs with copy protection may not play. The sound of the system was good, but it's not as nice as the Harman Kardon Logic7 system that can be had on this car.Our test 2006 Mercedes-Benz E350 may have been short on electronic goodies, but it definitely delivered in the drivetrain performance and handling departments. Its namesake 3.5-liter V-6, also used in the Mercedes-Benz ML350 SUV, shines as a luxury-sedan engine. It improves upon the previous 3.2-liter V-6 in its state-of-the-art mechanical and electronic technology. Where the old 3.2 V-6 was a single-overhead-camshaft design with three valves per cylinder, the new engine has dual overhead cams and four valves per cylinder. Its variable-valve phasing on both the intake and exhaust cams reduces emissions, as well as increases fuel economy and power output. Tumble flaps in the intake passages and dual-stage intake manifolds further improve efficiency and give it 258 pound-feet of torque between 2,400rpm and 5,000rpm, a broad, flat torque curve. Horsepower is rated at 268 at 6,000rpm. The E350 uses a console-mounted shifter for its seven-speed automatic, unlike the tree-mounted stick on the ML350.Mercedes-Benz's newest innovation, its 7G-Tronic transmission, uses seven gears, more than most contemporary cars' five- or six-speed automatics. Individual gear ratios are spaced closer together for more seamless performance, while the overall gear-ratio spread is wider, for improvements in acceleration from lower low gears and highway fuel economy from higher high gears. That said, EPA-rated fuel economy is only 19mpg in the city but a more acceptable 27mpg on the highway.Sophisticated computer-control algorithms with adaptive logic learn each driver's driving style and adjust shifts accordingly, but the transmission can also be manually shifted for maximum driver control and enjoyment. It's as close to a continuously variable transmission (CVT) as is possible, with discrete gear ratios. There are two automatic shift modes, Standard and Comfort, the latter of which shifts more gently and at lower engine speeds, plus is more appropriate for winter driving. Unlike with the ML350, the 2006 Mercedes-Benz E350's gearshift is controlled by a regular console-mounted shift lever.The combination of the 3.5 V-6 and 7G-Tronic transmission makes for a first-rate driving experience. Acceleration is brisk, with 0 to 60 reported by the factory to be less than 7 seconds. With the accelerator anywhere near to the floor, the car takes off at a great rate and holds gears until redline. We couldn't find any real advantage to manual shifting. When descending grades, the transmission chooses lower gears, letting engine braking slow the car. Only during spirited sports-type driving did manual shifting improve performance--however, not by much. At that time, too, the suspension calibration showed its true mettle. Our test car had the standard tuning of its four-link front, five-link rear suspension, not the optional sports tuning. This provided the smooth, comfortable ride expected of a luxury sedan. But when asked to perform, it did well. The steering is weighted nearly perfectly, plus it's neither too light for control nor too heavy for comfort.The 2006 Mercedes-Benz E350 has been rated by the Insurance Institute for Highway Safety as one of the safest cars on the road. As expected of a Mercedes-Benz, the 2006 E350 has a full complement of active and passive safety features. The unibody structure surrounds the passenger cabin with a strong safety cage, and front and rear crumple zones further protect occupants. Good handling, strong four-wheel antilock disc brakes with electrohydraulic operation, traction control, and the ESP electronic stability system help with active safety. In the event of an emergency, the Tele Aid system can provide assistance. The 2006 Mercedes-Benz E350's standard 48-month\/50,000-mile warranty against defects in materials or workmanship can be extended by up to an additional 36 months, with total mileage up to 100,000 miles at any time during the initial warranty period.