BUILDING inspiring compact sedans has never been a Mercedes-Benz forte. In fact, since BMW invented the market segment with the first 3 Series in 1975, successive attempts in the W201 190E of 1984 and the W202 C-class of 1994 have failed to lure Australian buyers in greater numbers.

But the all-new W203 version hopes to change that. Record sales of the sexier, more powerful, more sporting and better value C-class have seen it surpass the M-class as Mercedes' best seller here since its November 2000 launch and it even outsold its BMW rival in January 2001.

Though the 3 Series remains Australia's most popular small prestige sedan by a fair margin, Mercedes-Benz's newest small sedan delivers by far the most sporting C-class driving experience ever and even surpasses its opposite number at BMW in a number of areas not traditionally accepted as Benz strengths.

Most amazing is the lack of wind noise within the cabin. So much so that apart from a modicum of tyre and engine noise, and a small degree of buffeting from the exterior mirrors at high speed, the C-class interior is now practically devoid of external noise - a feat even the premium S-class can't match.

Next surprise is the ride, an area in which Mercedes-Benz cars always shine - and the new C is no exception. Brilliantly compliant over all but the largest of surface irregularities, the C-class delivers a quality of ride better than that of many larger and far more expensive prestige cars.

But a quiet cabin and good ride are attributes we've come to expect from Mercedes-Benz: the interesting thing here is that they seem to come at virtually no expense to handling, which is perhaps the new car's greatest strength.

There is a degree of bodyroll during initial turn-in and over-zealous cornering will eventually result in a predictable degree of understeer, but the W203 is light years ahead of its predecessor in terms of grip and sheer cornering ability.

Model for model, the C-class might not outcorner its 3 Series rival, but there's now very little in it and, more importantly, the Benz does it more comfortably and with less risk of wild power oversteer taking its driver by surprise. At the same time, though the new chassis is more agile than ever, high speed stability remains unquestionable.

Integral to its new-found ride/handling brilliance is the C-class's new rack-and-pinion steering, which replaces the outgoing model's recirculating ball system. Though it retains that uncanny Benz ability to filter out all but the most essential of feedback to the driver through its multi-function tiller, the steering is now better weighted, more precise and more communicative.

While some say it's now even better than the 3 Series', there's no doubt the new steering - combined with a new three-link MacPherson strut front suspension - plays a big role in making this the best handling C-class ever.

To match the vastly improved chassis dynamics is a new engine range that Mercedes-Benz says delivers 20 per cent more peak power and torque. It includes a naturally aspirated and a supercharged version of the same new four-valve 2.0-litre four-cylinder (C180 and C200K), a diesel in the C220Cdi and two new three-valve V6s (a 2.6 for the C240 and a 3.2 for the C320).

In base C180 guise, that means a highly oversquare four-cylinder delivering a respectable 95kW at 5300rpm and, more importantly, 185Nm of torque at just 3500rpm. On the road, combined with either Mercedes' impressive sequentially-shifting semi-automatic 'Tipshift' transmission or the optional six-speed manual gearbox, that translates to strong, seamless acceleration with a modicum of engine noise.

Performance from the smallest C-class engine isn't gob-smacking but is certainly a big advance over the outgoing C180's 1.8-litre unit. It's also a good match for Audi and BMW's entry-level fours and remains our pick over the somewhat disappointing and gruff supercharged version found in the C200K.

Elsewhere lie all of the ergonomically sound Benz qualities to which we've become accustomed. Safety features are predictably cutting edge, including new frontal 'crash boxes', standard stability control (ESP), ABS, Brake Assist and five three-point seat belts, plus two-stage front airbags, windowbags and four side airbags.

The standard equipment level is excellent - even in base C180 Classic specification - and includes power seat height and recline, power windows and (heated) mirrors, a fully adjustable steering wheel, Tex/leather upholstery, trip computer, cruise control, driving lights, automatic climate control, remote central locking, woodgrain trim, single-CD sound system and eight airbags.

Of course there's the usual plethora of optional extras, including the Elegance model's 15-inch alloy wheels and the top-spec Avantgarde's 16-inch alloys instead of the Classic's 15-inch steel items, plus door exit lights, Bose sound system, speed-sensitive steering, "Comand" radio/CD/sat-nav system, Xenon headlights, sport seats, headlights washers, sunroof, rain sensor, "Parktronic", memory front seats, "Thermotronic" luxury climate control, in-boot CD stacker, "Linguatronic" voice control for the phone and audio systems, an AMG bodykit and a split-folding rear seat - the latter being the only significant omission from the C180's standard specification list.

Greatest feat of the new C-class, however, is the fact it was actually less expensive at launch than its predecessor - quite a feat for an all-new Mercedes. Selecting the six-speed manual transmission as a delete option makes the C180 and C200K even cheaper, but to accomplish this Mercedes-Benz has made some obvious shortcuts.

They may be minor details, but the leather seat trim in a number of W203s we've driven had separated from the plastic seat back, while others emitted an annoying dash rattle. Items like the flimsy plastic centre console latch would never previously have been found in a Mercedes, and the new South African-built cars lack the vault-like solidity of previous C-class models.

That said, there's no denying the dynamic integrity of the new chassis. The C180 feels refreshingly taut both in terms of body rigidity and transmission of power, and vastly improved performance and dynamics maintain its reputation as one of the world's finest compact sedans.

The C180 represents a realistically priced entry point to a new compact sedan range which blends traditional Benz strengths like cutting edge safety, design, technology and resale value with more than a liberal dose of sporting attitude.