Image: 2005 Mercedes-Benz E320 CDI
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The 2005 Mercedes-Benz E320 CDI looks a lot like other E-Class sedans. But like most diesels, the E320 CDI will get far better fuel mileage than a gasoline-powered car.
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updated 3/9/2005 1:37:30 PM ET 2005-03-09T18:37:30

Each year at this time, we release our annual guide to the most fuel-efficient cars on the market. This year the big news is not gas/electric hybrids, as it has been for several years, but diesels — which are on the rise.

The list that follows includes several diesels, such as DaimlerChrysler's new version of its Mercedes-Benz E-Class luxury sedan. More diesels are on their way to market, and upscale automakers such as BMW and Audi say they are considering selling diesels here.

Of course, the other relevant news item is the high price of oil. According to the Associated Press, oil prices are roughly 45 percent higher than a year ago, and have increased sharply in recent weeks due to a combination of colder weather, the declining value of the dollar and fears that OPEC could rein in production to head off a seasonal drop in demand. Instability in Iraq and underlying fears about terrorism have also played a part in the rally. Now is as good a time as ever to consider fuel economy.

You can get that good fuel economy with a hybrid or a diesel, or you can do it the old-fashioned way: with small car with a small engine, such as the Volkswagen Golf. The diesel Golf gets 38/46 city/highway mpg and is the most fuel-efficient hatchback sold in the U.S., but the gas-powered Golf still gets an impressive 24/31 city/highway mpg.

The source for our fuel-economy data is the Environmental Protection Agency. When determining the most fuel-efficient car in each category, we looked at which specifications of a particular car would generate the best fuel economy. For example, manual transmission cars ordinarily have better gas mileage than automatics.

© 2012 Forbes.com

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