Another thing not helping their reputation is hand-me-downs to Chrysler, like the old SLK body that's now Crossfire.
I completely agree, E, S and SL. The CL should still be available but as it was with early W140 and W126's as a "S-class coupe" and not a completely different designation. There should be a super-luxury limousine available ala the 600 from the 60's to the 80's - that should have been Maybach or one designed to compete with it. They should make S, SL and that limousine at least partially by hand. To symbolize the change of quality, they should also change back to numbers first, letters second.
They should go back to keeping the models and body styles for 10 years so the next models and the technology in it is guaranteed to be of the highest quality due to the research and test times.
They should keep low price products to the SMART line - maybe have the C-class as the top flagship model for the smart car, but make it an economical diesel and of couse with some styling changes. It's all about name association.
Until the last decade and a half, Mercedes-Benz was not about competeting, except for against themselves. Who cares if C-class isn't there to compete with A4 and 3-series - the pull from the lower price products ring may loose a lot of money, but in exchange makes the products you do have valued more and way more exclusive. Besides, MB is not about sporty little cars, leave that to the SL and the competitors. They're more about full-sized LWB luxury saloons that are powerful, solid, exclusive and safe.
And if the products you do have are a lot more expensive to the competitors due to high-quality systems, research and materials and low failure rates, who cares - people will pay for the Mercedes-Benz name and the guarantee of quality that price brings. What ever happend to "the best or nothing" or "engineered like no other automobilie". Now it's "Mercedes-Benz, you're ready": yeah, because now everyone can own one.
Audi and BMW also play this dangerous game with low price products as their move down-market with the A2, A3 and the 1-series and risk making their products as affordable and as common as domestics.