Audi AG and BMW AG could be shaking in their stiefel right now.

Unless the most unexpected happens, the new Mercedes-Benz C-Class will be an instant and substantial success. So much so that Audi and BMW should start worrying right now. The new compact sedan is fighting back on the front its competitors have invaded: dynamic, emotional, high-tech and performing sport sedans.

In presenting the new baby from Mercedes-Benz, Juergen Schrempp, DaimlerChrysler chairman, says the new car is not a "small S-Class but a great C-Class." Our first impression is that he is absolutely right. The new Mercedes looks like a great car in its style, performance, comfort and technology.

Mr. Schrempp says his company has invested some $700 million in the Sindelfingen and Bremen plants which will make the vehicles. Almost as much money, $670 million, has been invested in the development of the product range.

Following the change in direction marked by the launch of the S-Class, the new C-Class goes further out with body design, exhibiting muscle.

Under the hood there will be at least four gasoline engines and three diesel options in Europe.

The 4-cyl. units include the normally aspirated C180 and the supercharged C 200 Kompressor. Upscale, there are the new 2.4L and 3.2L V-6s. The U.S. is set to receive only V-6s on C240 and C320.

The diesel range, which will not hit U.S. shores, includes the brilliant 5-cyl., 123-hp inline 2.7L. Downscale, there are two 4-cyl. 2.2L diesels.

Another major innovation is the all-new, very compact and light six-speed gearbox available in all versions. It's the only alternative of a fully automatic 5-speed transmission. The six-speed manual will come standard in the U.S. on the C240.

The passenger compartment also has been entirely reconsidered. Its design may not be revolutionary but it certainly marks a major advancement in style. It is modern, dynamic and progressive, while remaining distinctly Mercedes.

Deliveries will not start in Europe before May. U.S. sales will begin in September and could be followed next year by a hatchback, station wagon and all-wheel-drive sedan.

DaimlerChrysler AG plans to produce 160,000 cars by the end of this year. In 2001, production is projected at a total volume of some 260,000 units.