DAIMLER knows it can ill afford slip-ups with its Mercedes-Benz C-Class – its traditional bread-and-butter model that forms the bed-rock of its global sales success.

The German company puts a little extra energy into each new C-Class generation, knowing that it needs to at least match – and preferably exceed – the standards set by formidable rivals such as the BMW 3 Series, Audi A4, Volvo S60 and Lexus IS.

The arrival of a new C-Class sedan is an event like few others on the motoring calendar, encased in high hopes and much anticipation, with journalists and customers alike expecting nothing less than a new benchmark in class.

So it was with the Australian launch this week of the latest W205 C-Class – an entirely new iteration based on Daimler’s new modular MRA (Mercedes Rear-drive Architecture) platform that will carry all the company’s larger passenger cars in future.

Well, the powers-that-be at Mercedes-Benz Australia Pacific’s Mulgrave headquarters in Melbourne need have no fears, as the latest model is a pearler – the best C-Class ever built by a fair margin, and the new yardstick in its class.

It will give its luxury car-making rivals some heartburn, especially as it is priced line-ball with many of them, starting at $60,900 (plus on-road costs) – $1000 more than the outgoing model.

To paraphrase former Labor prime minister Paul Keating, Mercedes is going to “do its opposition slowly”, adding new variants one by one over the next 12 months or so, with each one turning the screws a little harder.

So far, we have only driven the mainstream four-cylinder models – the high-volume sedans powered by the four-cylinder petrol and diesel enginesHowever, these models – the C200, C250 and diesel C250 BlueTEC – not only acquit themselves with aplomb, but moreover, they reveal the potential of the new platform for more exciting models – including the next C63 AMG with its twin-turbo 4.0-litre V8 – when they come on stream next year.

The word that leaps to mind when driving the C-Class is competence – with a capital C. The handling, steering and ride of the chassis is exemplary, capable of gliding along country roads like a true luxury car and yet taking corners at speed without a hair out of place.

We have, in the past, been critical of various cars fitted with electrically assisted power steering, but the C-Class takes that new format to a higher plane, delivering loads of feel with a light and easy touch via a beautifully sculpted, leather steering wheel.

Tip the car into a corner and it obediently tracks around the bend, flat and surefooted, all the time providing confidence-inspiring feedback – not just a bit, but in triplicate. Meanwhile, the numerous safety technologies are riding shotgun, ready to step in to keep the car shipshape.

Dynamics like this are usually delivered via teeth-rattling sports suspension, but the C-Class maintains a supple ride – a factor than can be at least partly traced back to its new multi-link front suspension design that essentially divides the suspension parts into two roles – the load-bearing spring-and-damper strut on one hand, and upper and lower links that control the wheels on the other. The result is more lateral grip while maintaining a silky ride and slick steering.

Added to this, Mercedes has included a multi-mode drive system that, with the flick of a toggle switch on the console, allows the driver to switch between economy, comfort, sport and sport+ settings that adjust a range of systems such as the suspension damping, steering weight, throttle and automatic transmission mapping for a more defined driving experience. There is even one setting, called individual, in which the driver can mix and match the various systems to their own taste.

The result is a car for all moods, from relaxed highway cruising to a frolic on a mountain road. If the customer wants to go further, optional air suspension is available – a first in this class – but we are not sure we would bother, as the standard steel springs and gas dampers felt pretty slick to us.

Aluminium has been used extensively in the new light-weight body, fundamentally to enhance performance and fuel economy. Despite this, the monocoque felt up to the mark in rigidity and noise suppression – and significantly more solid than that of the C-Class’s disappointing smaller brother, the front-drive CLA sedan.

Acceleration wise, none of the three models we drove on our first taste of the C-Class could be classed as road racers, providing sprightly forward motivation rather than scintillating thrust (those models are yet to come).

The turbocharged 2.0-litre petrol engine of the C200 (135kW) and C250 (155kW) are smooth and quiet – ideal for a cruisy commute or run in the country.

For us, the pick of the bunch is the 150kW 2.2-litre four-cylinder diesel, mainly because of its deep well of torque than helps to cover any performance shortcomings.

Like the petrol engines, this diesel is hooked up to Mercedes’ seven-speed automatic transmission, which might have been around a while in the Benz range, but works perfectly well here.

We did not get to drive the base diesel, the C200 BlueTEC, as that is not due in showrooms until the New Year. Without a doubt, that will be the most efficient powertrain of the lot – Mercedes promises something in the region of 4.0 litres per 100km – but with an engine capacity of 1.6 litres, we are not expecting tyre-smoking action.

On our test loop, the petrol C250 returned about 9.8L/100km, which is short of the claimed 6.0L/100km, but not unusual.

One of the best aspects of the new C-Class is its stylish interior, which adopts a more sporty air with items such as the round metallic air vents from cars such as the SL and SLK.

The base car gets Mercedes’ fake leather, called Artico, but it looks the part and feels up-market to the touch. The C250 models – petrol and diesel – get real leather, but if you want the bee’s knees, the full optional AMG sports interior is the go.

The ergonomics of the newest Benz are faultless, with the exception of a couple of items – the steering-column-mounted automatic transmission selector and cruise control stalks. Both can be accidentally bumped, potentially with dire consequences.

Yes, Benz says you get used to them, and no doubt owners do, but one day, an inexperienced driver is going to knock the transmission into neutral, or accidently lock on the speed limiter, with unfortunate results for them and trailing traffic.

At least the C-Class now has a modern electric-operated handbrake instead of a foot pedal system. (Memo Lexus: please note).

Another great innovation is a console-mounted touch-pad style controller for various systems such as the audio, phone and sat-nav. And just like on your smart phone, a pinch of the fingers will zoom in on the navigation map.

In our short time in the car, we did not get to explore all the possibilities with this control system, but its potential was obvious.

Mercedes-Benz’s engineers have attempted to overcome a shortcoming of previous C-Class models – the shortage of knee room in the back seat – by stretching the wheelbase to liberate more space. Sadly, tall passengers with long legs are still going to jam their knees, although not as badly as before.

Boot space is plentiful, and the cabin has a reasonable supply of storage spaces for knick-knacks.

Standard equipment is reasonably plentiful – for a German car – including niceties such as sat-nav and automated parking, but stepping up the C250 not only adds items such as full leather seats and keyless entry, but also a high level of safety gadgetry.

The usual options packages are also reasonably priced – for a German brand – and we can see many customers ticking the box for the Comand package and its bigger LCD screen and Burmeister audio system, or the AMG Line with its sports seats etcetera.

Overall, the C-Class represents a tempting proposition for luxury car buyers.

Those looking at buying a Mercedes CLA should move heaven and earth to round up the extra $10,000 for the C-Class.

As it has been described, the C-Class is rather like a “downsized S-Class”, which is no bad thing.