When Mercedes responded to concerns over the energy crisis by introducing its small 190E sedan in 1983, it was commended for preserving many qualities found in its larger, more substantial offerings.

Now, as the "Baby Benz" heads toward its next major regeneration after several evolutionary changes, its purpose is more vital than ever.Not only is it a showcase the German automaker hopes will attract buyers to move up to more expensive models; it is also the front-line defense against an onslaught of new luxury sedans by Japanese automakers, who have fired several warning shots across its bow.

"Their success has not come at our expense," a top executive of Mercedes-Benz North America said recently, adding "there is room for a full spectrum" of luxury cars in the U.S. market.

Maybe so. But for 1991, Mercedes did something quite out of character at a time when it is about to break into the six-figure price-range with a new family of large S-class sedans due out later this year.

It lowered the price of its four-cylinder 190E 2.3 sedan to make the "entry" model the first Mercedes in two years to sell for less than $30,000.

That is still undeniably more than most of us might pay for a new car, let alone a small sedan shorter than a Ford Tempo and powered by afour-cylinder engine.

But bear in mind that the typical imported car cost more than $18,100 last year, and that Mercedes' best-selling sedans are in the $40,000-$50,000 range.

Driven for this review was a 190E 2.3 sedan with a 4-speed automatic transmission and a base price of $29,250. The 5-speed manual version is $900 less. (And a 190E 2.6 sedan, which has a six-cylinder engine, starts at $33,100.)

As expected, a full complement of safety and comfort features is standard: anti-lock brakes, automatic air conditioning, AM-FM stereo cassette, electric windows and doors - even a first aid kit. A driver's air bag was made standard for 1991.

Still, several big-ticket extras raised its sticker above the $30,000 mark to $31,755: electrically adjustable front seats ($1,000), electric sun roof ($960) and an anti-theft system ($545).

Several hundred miles spent with the 190E sedan showed it to indeed possess the same qualities its larger siblings have become known for, only scaled down a bit.

Its cabin, for instance, is very similar in looks and room to the larger 300E sedan, with the same well arranged analog gauges, controls and large steering wheel. Even the driver's view of the hood is purposely similar.

The only obvious differences are a dashboard and door panels that are not as richly trimmed. Trunk space is about 3 cubic feet less than the 300E, at 11.7.

Its 2.3-liter, four-cylinder engine, canted 15 degrees to permit a lower hoodline, delivers a respectable 130 horsepower at 5,100 rpm, and 146 pound-feet of torque at 3,500 rpm.

While it retains the conventional two-valve-per-cylinder layout and single overhead camshaft at a time when most fours embrace 16-valve designs and dual cams, its power compounds quickly and smoothly in this 3,020-pound sedan.

Fuel economy is 21 mpg city/27 mpg highway, but premium unleaded fuel must be used, as in all gas-engined Mercedes.

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Part of the 190E 2.3's smooth, solid ride can be traced to its five-link independent rear suspension, now found beneath larger Mercedes cars. It also has a long suspension travel and extremely rigid body shell.

About the only complaint was a slight knock in the steering column or front suspension when the test car was driven over some winter-ravaged roads. Otherwise, close scrutiny revealed a very high level of overall fit and finish.

The fact that the "Baby Benz" has managed to remain one of the most impressive sedans, even when compared with larger offerings eight years later, is testimony to sound engineering.

But the market is more crowded than ever with extremely competent luxury and sports sedans costing between $28,000 and $35,000. Some are larger and more powerful, while others, like Alfa Romeo's 164, are attractive new offerings not seen on every street corner.

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