A long overdue air of quality has returned to Mercedes-Benz's bread-and-butter C-Class range. Recent years has seen a dreadful decline in trim and finish with question marks hovering over some electronic issues within the once-unimpeachable Stuttgart marque. But no more.The latest addition to the C-Class family, the three-litre V6 C 320 CDI turbo diesel, is a stunning executive saloon. It comes in three trim levels - Elegance and Avantgarde at £31,020 then Sport at £32,850 - with the rare Sport Edition I'm testing here sitting as a premium model at £34,150. All share the same impeccable quality, fine dynamics and performance to match some of the quickest petrol executive cars on the market.Dropping the new three-litre V6 CDI into the small C-Class body has transformed the car. It's a smooth and refined oil burner with 224bhp and maximum torque of 376lb/ft - that's more grunt than BMW's X5 3.0d.The car's performance is electrifying. Anyone who can remember the heady days of the Mercedes 190E Cosworth will have a taste of the C 320 CDI's performance ability. It's fast, agile and satisfying, and can deliver much more than the rumbustious Cossie. Unlike the Cosworth, the C-Class turbo diesel is refined, comfortable, well-appointed, relaxed and much more affordable.The Sport Edition comes with goodies like full leather, slick-changing 7G-TRONIC automatic transmission, AMG bodystyling, 17" six-spoke alloys (which seem a mite too small for the car), special Sport Edition detailing, metallic paint, a subtle boot spoiler and a lowered suspension which makes the car feel taut without spoiling the C's legendary ride quality.Mercedes is clearly trying hard to lift its tarnished image. This C-Class arrival is doing the job brilliantly. In terms of handling and covering long distances without fatigue it's an amazing car - so impressive that I wonder why anyone would trade the smooth turbo diesel's performance and average 37mpg economy for the dubious delights of petrol.The further I drove this compact executive saloon the more it surprised me. It's not the most exciting to look at, despite attempts to give it some visual razzmatazz. Even inside the aluminium trim seems slightly out of place, almost apologising for not being fine walnut. But the seating is superb - supportive, well-made and, on my test car, offering full electric adjustment with memory for both front seats and the steering column for a whopping £1035.That's expensive, but I felt the £320 extra Mercedes charges for indifferent front seat heating is a throwback to the bad old days of "charging what the market will stand". Seat heat should be part of the powered adjustment package, and a lot cheaper.Like every premium car from Germany there's a cost to be paid for options. The C 320 CDI was no different. As equipped it topped out at £105 less than £40,000. The test car's specification included items like rain sensors at £90, which should be standard, and one of the industry's finest DVD-based satellite navigation systems which costs a mighty £1830 but represents great value. It has one of the clearest screens available, is easy to use and thanks to being part of the Mercedes COMAND APS system is integrated with top-quality radio and CD functions.Careful option choice will deliver a fabulous compact sporting diesel saloon and provide the owner with a stunning road car and his or her passengers with a comfortable and safe environment. Like all C-Classes the CDI comes with extensive safety protection including front, side and window airbags.On the road the C 320 CDI ranks alongside BMW's new 330d. It's not quite so engaging to drive as the 3-Series, but there's precious little in it. In terms of relaxed comfort, appointments and atmosphere the C-Class is more traditional. Dash quality has returned to where it should have been at the start and while Audi still hold the high ground on cabin style, fit and finish, Mercedes are on their way back.Driving on greasy winter roads allowed me to explore the Sport Edition's handling. Having driven the same engine in the latest E-Class estate I expected it to be brisk. What I was not prepared for was its blistering acceleration, incredible sustained performance and the grip the rear-wheel drive and five-point rear suspension gave me. Heavy braking showed the ABS and Brake Assist functions to be perfectly balanced to the car, although there's a substantial amount of shudder as the ABS goes to work.As a sporting saloon the C-Class comes of age with this new diesel. It's a punchy but refined unit with peak power available at 3800rpm and maximum torque arriving at only 1600rpm. Heavy throttle use sees 62mph arrive in under seven seconds, and every overtaking manoeuvre is rapid, sure and satisfying.Mercedes deserves success here. The C-Class has always been a good car, now it has regained what it had lost - quality. And with that will come the return of Mercedes credibility. Engine 2987cc, 6 cylinders Power 224bhp Transmission 7-speed automatic Fuel/CO2 37.2mpg / 201g/km Acceleration 0-62mph: 6.9 seconds Top speed 155mph Price £34,150 Details correct at publication date