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Originally Posted by mkoesel
It remains somewhat baffling that they have no apparent plans to include their new M256 I6 engine family in their performance product lineup. It leaves an obvious hole - 400hp ICE and 600hp ICE, but no 500hp ICE. They went through the trouble to develop the engine only to leave it hamstrung at 430hp, and then went ahead and pushed their four cylinder beyond that - to within an inch of its life, it would appear. Sure, it's more difficult to package an I6, but that should not have been a surprise. It's not like they hadn't ever built an I6 engine before. And with the beltless design, the new one is very compact.
This would seem to leave them vulnerable to BMW (and others) who can bring performance PHEV setups with six cylinder engines to market that make far more than the 440hp of their M139 I4 (before you get to the electric motor side). Obviously Mercedes still has the V8, but so does everyone else. And at this point, no one is putting a V8 in smaller vehicles anymore, PHEV or otherwise. By contrast, there is still plenty of time left for six cylinder engines in such vehicles.
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I believe its mainly because its not a hand-built AMG engine. Similar to a BMW engine, its a series regular engine that is tuned or enhanced. The engine isn't being abandoned as its going to be used in all E-Class and up series vehicles, as well as the new S-Class in S500 and S580e trims, just won't be used in a full-fledged AMG model. Only the M139 and M177 are hand-built. I'm not sure why exactly they don't want to use the M256 but it seems AMG is only interested in using the M139 and M177.