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The second generation C-Class was introduced in 2000, with a sportier look than the previous generations, with a steeper front-end and shorter rear-end. The styling cues were similar to that of the W220 S-Class. The sedan debuted with a range of straight-four and V6 gasoline engines and straight-four and straight-five Diesels. Most of the engines were carried over from the W202, but the C 320 was exclusive, offering 218 PS (160 kW; 215 hp), also the C240 now had 2597 cc but output was unchanged at 170 PS (125 kW; 168 hp). The diesels now featured common rail direct injection and variable geometry turbochargers. Six-speed manual gearboxes were now standard for nearly the entire range (except the C320 and C 270 CDI). For the first time, the number designations were no longer equivalent to the engine displacement, more specifically in the C 200 (1.8 L), C 240 (2.6 L) and C 200 CDI (2.2 L).

In 2001, Mercedes increased the range, with the introduction of the new T-Model station wagon and Sport coupe. The Sport coupe was a three-door lift back made to counter the BMW Compact, but like its competitor, it proved unpopular with the younger buyers it was targeted towards, due to high prices compared to the lower entry-level models it was competing against, and unfavourable exchange rates. Although removed from the North American lineup in 2005, it continued on sale in other markets. From October 2000 until 2007, a total of 230,000 Sport coupes were built in the Bremen factory and in Brazil. In Canada, it was replaced by the Mercedes-Benz B-Class. In 2003, a new family of supercharged four cylinder engines, dubbed M271, also debuted. All of them used the same 1.8 L engine, with different designations according to horsepower levels, including a version powered by natural gas. The 193 PS (142 kW; 190 hp) C 230K was initially available only in the Sport coupe (replacing the 2.3 L engine in 2002 and older models). The newer 1.8 L was less powerful but smoother and more efficient than the older 2.3 L (192 PS (141 kW; 189 hp) compared to 193 PS (142 kW; 190 hp). 4MATIC four wheel drive versions were also offered for the C 240 and C 320.

The C-Class was refreshed in early 2004. In this year, the interior styling was changed in all three body styles. The instrument cluster was revised to display a full set of analogy gauges, as well as a full revision of the centre console and audio systems. A fully integrated iPod connection kit was available as was a better Bluetooth phone system made optional. New electrics made it more reliable after the "Model lpflege" (model revision.) For the USA market C230, the "sport" package was made standard which included AMG edition bumpers, side skirts and front 4 calliper cross drilled brakes from the C55. Wide body rear suspension with sport tuned springs and dampers completed the package for 2005. In 2006, Mercedes softened the ride some due to complaints that the 2005 models with the standard AMG edition springs/dampers were too stiff for standard issue. Different taillights were added to the Sport coupe and several all-new M272 and OM642 V6 engines were introduced later in the year. Both petrol and diesel engines were added. The C230 V6, C280, C350 replaced the C240 and C320, the new-generation 6-cylinder engines developed substantially more power than the older version, by as much as 24% more, whilst also increasing fuel economy and reducing C02 emissions. The C230 V6, C280 and C350 developed 204 PS (150 kW; 201 hp), 231 PS (170 kW; 228 hp) and 272 PS (200 kW; 268 hp) respectively. The three-valve twin spark design was replaced by a four-valve design, now with variable valve timing. . On the diesel side too, things were much improved, with a brand-new V6 3.0 litre CDI diesel. The new V6 diesel offered masses of more power compared to the C270 CDI, by as much as 32% more, the CO2 emissions and fuel economy were also bettered; the output of this engine 224 PS (165 kW; 221 hp) and its torque of 510 Nm made it the world's most powerful diesel at the time. The C220 CDI received a power increase from 143 PS (105 kW; 141 hp) to 150 PS (110 kW; 148 hp) In addition, these engines also received the new seven-speed 7G-Tronic automatic transmission, a more economical naturally-aspirated 1.8 L (C 160) was added to the Sport coupe line-up.

The last W203 C-Class sedan was produced on December 14, 2006 at the Sindelfingen plant.

However, the W203 Sport coupe lift back will continue to be produced in Brazil beyond this date, since Mercedes-Benz does not foresee producing a W204 Sport coupe. Indeed, it has decided to offer an updated W203-2 or CL203 Sport coupe with a new restyled front end inspired by the W204 sedan and an improved engine range parallel to the one of the W204. It was also spun off into its own separate line as the CLC-Class.

Source: http://en.wikipedia.org/wiki/Mercedes-Benz_C-Class