Burned by a nosedive on JD Power reliability survey, Mercedes recalls E-class cars

2K 2003 models being replaced because navigation system retrofit is undoable

Mercedes, #1 in quality in 1990, slides in latest ranking from 16th to 26th

Business Week asks if Mercedes is paying the price for assigning "best executives" to Chrysler (which outdid Mercedes in poll)

Customers dissatisfied w/ Mercedes for problems w/ handling, braking, shocks and struts, window controls, fuel gauges

Redesigned E-class w/ new navigation system prepaid ($2,125), but couldn't be retro-fitted by dealers

Mercedes decided against refund for navigation system, opted to replace entire car in unprecedented move

Dealer Stephen Smythe (Beverly Hills, Ltd, in CA) hails replacement, though rest of components had no problems

Smythe expects returned cars to go into used-vehicle market, despite negative press

Mercedes image suffering from double blows, seen hurting long-esteemed resale values

Competitors tougher to beat, as Toyota moves ahead of Stuttgart rivals in Europe w/ Lexus luxo models, Yaris subcompact