New supercharged 1.8-litre engines will replace the standard 2.0-litre and the supercharged 2.0-litre and 2.3-litre in the C-class saloon, estate and Sports Coupe ranges.
The new C180 Kompressor will replace the C180 and with carbon dioxide emissions of 175g/km falls within the 17% company car tax band – lower than the 18% of the diesel C220 CDI.
That puts it on a par with the equivalent BMW 3-series, the 318i, but the Mercedes' slightly lower P11D price gives it a £10 a month advantage over the 3-series for company car tax. It also comes close to the BMW for fuel consumption with a combined figure of 38.7mpg against the 318i's 39.2mpg and undercuts rivals from Audi, Jaguar and Lexus.
The new C180 Kompressor also represents an 8.6mpg improvement on the combined cycle over the less powerful outgoing C180, and a 50g/km improvement in carbon dioxide emissions. It means a 40% tax-payer will make a saving of nearly £800 this year compared with the previous C180.
Meanwhile, the new C200 Kompressor engine, developing 163bhp, offers CO2 emissions of 185g/km – the same as a 1.8-litre Ford Mondeo.
Sports Coupe models will offer the same fuel consumption and CO2 emissions as manual and automatic saloons, while estate models will be a little higher.
The most powerful Sports Coupe, the C230 Kompressor, now develops 192bhp (the old model boasted 197bhp), but emissions are down from 237g/km for the manual to 194g/km, and fuel consumption is improved from 28.5mpg on the combined cycle to 34.9mpg.
The move comes weeks after C-class prices were cut to bring the entry-level saloon below £20,000 on-the-road. Nick Ratcliffe, head of corporate sales at Daimler Chrysler, said: 'The C-class has always been desirable as a user-chooser car with low cost of ownership, but the effect of the new engines on personal taxation ensures it now wins on all fronts.
'We expect an increase in C-class volumes as a result of this and our recent action to realign prices and introduce SE packs, but we will always control sales with an eye on residual values.
'We don't want to undo the good work we have done by oversupplying the market, and the early response we have had from market analysts to the SE packs has been good.'