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The C 230 Kompressor variant sported 140 kW (188 hp). All of them used the same 1.8-litre engine, with different designations according to horsepower levels, including a version powered by natural gas. Then in 2002 for the 2003 model year, a new family of supercharged four cylinder engines, dubbed M271, debuted for the entire C-Class range. The third body variant, a station wagon codenamed S203 arrived in 2001. The US model, labeled C 230 Kompressor, became available for the 2002 model year with the M111.981 engine, a 1.8 -liter supercharged inline-four making 143 kW (192 hp) at 5500 rpm and 280 N⋅m (210 lb⋅ft) at 2500–4800 rpm.

Mercedes-Benz debuted a coupe variant in October 2000 (launching in 2001), labelled the C-Class SportCoupé and given the internal designation CL203 (see below). There was a version of this car that was made in Korea. Six-speed manual gearboxes were now standard for the entire range, except the C 320.

The diesels now featured common rail direct fuel injection and variable geometry turbochargers.

Most of the engines were carried over from the W202, but the C 320 was exclusive, offering 160 kW (218 PS). The sedan debuted with a range of inline-four and V6 petrol engines and inline-four and -five diesels. The second generation C-Class was unveiled on March 21, 2000, going on sale starting in September 2000. Testing began in 1997, with development concluding in 2000. Design patents were filed on 20 April 1998 and 4 March 1999. Design work on the W203 C-Class began in mid-1994, with the final design being approved in December 1995 by the executive board.

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