Mercedes-Benz’s new entry-level E-Class model will be priced at £2,500 less than the current version as the manufacturer aims to battle arch-rivals Audi and BMW head-on.

The E200 CDI SE with a manual gearbox will have a P11D price of £26,150 when it goes on sale in September – £2,538 less than the current entry E220 CDI Classic.

The move means Mercedes-Benz finally has a head-on rival to the volume sellers in the A6 and 5 Series ranges – the A6 2.0 TDI and the 520d.

Nick Williams, product group manager at Mercedes-Benz, said: “We have never got close to getting pricing this low for the E-Class.

“However, this is no stripped-out model, as all E-Classes come with Bluetooth telephony, alloy wheels, heated seats and rain-sensing wipers as standard.

“More than 50% of volume in this sector is to fleet buyers and with an improved manual gearbox this is an area we will focus on because the car also offers lower pricing and CO2 emissions than an automatic.”

Manual gearboxes have traditionally accounted for just 5% of E-Class sales, but this figure is expected to grow.

Also fitted as standard will be Attention Assist – a device that monitors a driver’s behaviour and sounds an alert if it detects the driver is tired and taking ‘micro-sleeps’.

Williams added: “Safety and duty of care is the whole focus of this car, and Attention Assist should give fleet managers a comfort.”