I should point out that I have a grudge against Mercedes. In my observations, at least where I drive, Mercedes seem to be driven by a disproportionate number of people who are either jerks or clueless.
I’ve had two Porsches, which is only relevant because they are German. They were very expensive to repair. They were also the most fun cars I’ve owned. I’ve ridden in Volkswagens, Audis and Mercedes. It seems to me that the older they get, the more problems they have. Sometimes it’s an expensive engine problem. More often it’s an annoying little thing like a switch that doesn’t work right. I haven’t seen these problems (much) in Japanese cars.
But there is a certain something about cars that are not quite as common as others. Sure, the roads are crawling with Mercedes and Porsches; but there are far more Hondas. It’s fun to drive something that’s even a little different. So, a vote for the Mercedes.
But the Honda is likely to give you much less trouble over its life. When something does go wrong, it’s likely to be less expensive to fix. And the Mercedes already has 40k on the clock. So, a vote for the Honda.
Is this a car you’ll want to keep for ever and ever? There are so many Mercedes around that it probably won’t become a “classic” until long after you’re dead – if ever. But there’s something about driving an old car – witness my desire to get another 1966 MGB. Of course, the Mercedes you’re looking at won’t be old for a while. But if you’re just looking for reliable transportation and you plan to sell the car after a while, then the Honda is a better buy. It’s cheaper to buy, cheaper to maintain, it’s new, and if you’re not going to “collect” it then why buy the Mercedes?
Are you looking for a “status” car? I bought the Porsches because they were fun. They never helped me to “get a girl” (but then, I never tried to use them for that) or to impress people. I got them for the sheer fun of driving them. Is the 420E a fun car to drive? Is it more fun than the Honda? If not, then get the Honda.
Personally I would not be looking at either of them. My Cherokee tows my Willys (and towed my 911 when I had it), goes offroad on the Wilderness Discover Trail that the government so thoughtfully provided nearby, takes me camping, totes my kayak, takes me and my friends to lunch, and yes, even gets me to work and back. Except for the towing, the Mercedes or Honda can do that too. If I were looking for a car specifically to get me from Point A to Point B, there are other cars I’d consider. If I was looking for out-and-out fun on the roads, I’d go back to a sportscar. But given the choice between a new Honda for $9,000 less than an used Mercedes, and assuming I’m not “in love” with either of them, I’d choose the Honda.