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I had an 05 E500.
If reliability/cost of ownership is the concern, the C240 will be much better. (As long as you don't take 2 parking spots!)
It's still a fairly simple car. By 2003, most of the common problems in that series had been fixed. Like with most cars, the more mechanically straightforward car is going to be the more reliable and lower cost (something that doesn't exist can't break!)
The E500 was a "top of the line" type of model, and had all the bells and whistles. As earlyporsche pointed out, that includes an air suspension, which is ok when it works (actually, it's very nice when it works), but can be expensive when it breaks. It has an air pump, air lines, bladders, etc.
The early adoption of electric brakes on that E series was an acknowledged failure. Mercedes abandoned it for the 07 model year, going back to normal hydraulics.
Also, an '04 is an early generation E500 (for that body style). They def. got better as they worked the bugs out. I'd be way more comfortable with the 07 and up.
I didn't have any major problems with my E500. I didn't like the air suspension air pump running at random times (which is apparently normal). I didn't like the electric brake setup. I did have some minor electrical issues (seats, etc.) Overall, it's one of the few cars I've had that I didn't keep long term.
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