The manager of the Chevron station at Chandler Road and I-10 came running out to my car hollering, “That's diesel fuel! You don't want that!” When I told him my car was diesel, he still didn't believe me as he walked around the entire car looking for something that would indicate it was diesel. He just wasn't used to seeing a diesel car — especially a new car. There are a few older cars with the telltale oily-black diesel soot covering the rear bumper and tail lamp assembly, but the new Mercedes surprised him.

Mercedes-Benz, the company that invented the diesel car (the 260D in 1936) is debuting a new diesel-powered car for the U.S. market. The return of the diesel happened last month with the E320 CDI (Common-rail Direct Injection) sedan. The vehicle is identical to the gasoline-powered sibling I reviewed last year.

In the 1980s, more than 75 percent of all Mercedes-Benz cars sold in the U.S were diesel-powered. But all that changed when stricter emission regulations and 99-cent-per-gallon gasoline brought production to a halt. The last diesel was offered in 1999.

With regular unleaded gasoline now at $2.15 per gallon (the same price as diesel at Chevron), timing for the return of the diesel couldn't be better. Fuel economy is rated at 37 miles a gallon highway and 27 city, compared to the E320 gasoline engine fuel economy of 19 city, 27 highway. Not only does the diesel get better mileage, it does so without sacrificing performance. The CDI can reach 0-60 mph in 6.8 seconds, 0.3 of a second faster than the gasoline engine, thanks to a whopping 369 lb-ft of torque coming on as low as 1800 rpm.

A 3.2-liter inline six-cylinder double-overhead cam engine that churns out 201 horsepower and is paired with a five-speed automatic transmission powers the E320 CDI. The CDI comes equipped with the same standard equipment as the gas-powered E320, but the 4Matic transmission, sport and appearance packages are not offered.

I drove the new CDI for a week mostly in Maricopa County and a highway run to Prescott . Thanks to extra sound deadening insulation throughout the car and the common-rail fuel-injection system, which delivers numerous squirts of finely atomized diesel directly into the cylinders at pressures of over 23,000 psi, most of the diesel clatter noise is eliminated. The car was consistently quiet. In fact, unless I told my passengers they didn't know it was a diesel. On the downside, I did have to search for stations that had diesel fuel. The trade off is that with a cruising range of over 700-miles per tank you won't have to fill up nearly as often.

Also gone is the telltale diesel smell and black cloud of diesel exhaust following the vehicle. True, less carbon dioxide is released and the fuel burns more completely when compared to the diesel engines of old, but the exhaust is not as clean as it looks. The E320 CDI doesn't meet tightening emission regulations in five states — California , New York , Maine , Massachusetts and Vermont — where state regulations are more stringent than federal mandates. All 50 states must meet tighter California limits by 2007 and Mercedes expects to comply by that time.

Base price of $49,795 is just $1,000 more than the gasoline powered E320. Mercedes plans bring just 3,000 CDIs to the U.S. this year, so you may want to get one while you can. If you are considering an E320 I recommend you drive both the gasoline and diesel versions. I think most would choose the diesel given advantages to both performance and fuel economy.

Bottom line:

Like most people, I figured the diesel would be smelly, noisy, slow and no fun to drive. Boy, was I wrong. Diesel technology has come a long, long way and the vehicle performed as well as, if not better than, a gasoline powered model. The E320 CDI is just the beginning of the Mercedes-Benz return to diesel and you can expect more offerings in the future. If you want a new generation diesel and don't have an extra 50 grand on hand, check out the diesel versions of Volkswagen's Golf, Jetta and New Beetle models for as little as $17,000. Jeep also recently announced that the Common Rail Design (CDR) diesel engine will be available in its Liberty model.

Would I buy a diesel-powered vehicle? Yes, with no hesitation.

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