It's a size of car that the British call a "spanner"... no, wait, that's what they call a biscuit. This size car they call "Executive", meaning it's larger than a compact but smaller than a "Luxury Saloon".
In America it's a midsize, and Mercedes has been making them since the Fifties. Nowadays it's referred to as their "E-class", sized between the compact C-class and full-size S-class. It's the equivalent to BMW's 5-series or a Ford Taurus or whatever Chevy's currently calling the Maluminpala.
When the generation shown in the picture debuted back in the mid-'80s, it was just the known in-house as the W124 platform. Back then the letters went on the end of Mercedes model, and the "E" in 320E would have stood for "einspritzmotor", signifying a 3.2 liter fuel-injected car.
For the '94 model year, the letters got moved to the front of the model designation on Benzes*, since referring to a car as having an "einspritzmotor" in 1994 would have been as redundant as referring to it as a "vierräder". So from '94 on, the E320, like the '94-'96 wagon in the picture, was a midsize E-class with a 3.2 liter motor.
In this case, that 3.2L motor was a DOHC inline six putting out 217bhp. The '96 E-class was the last hurrah for the classic M-B straight six, with six cylinder Benzos using V-6 motors until 2017 saw the revival of the inline, with the turbocharged M276.
*Causing a great deal of distress for car nerds like me who had actually gone to the trouble of cracking the alphanumeric code on Jerry decklids. Don't get me started on how the numeric designations on Mercedes and BMW models only have the most tangential relationship to engine displacement now.
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