You may be thinking of the transfer case. It did change several times before the 2000 model year. My 99ML has the third generation transfer case but it still has it's problems. I think it was the 4th generation that was changed to a 52-48 gear ratio (mine I believe is a 51-49). 

Scott_Cairns - 10/16/2006 8:53 PM Thanks everyone for your replies. I guess another way to ask the question might be; When did the second generation (if there was an official designation as such) of M classes begin? Or were there slight improvements each year? Someone told me that the model with the indicators on the side-mirrors was the 3rd generation and vastly improved in many ways (something like 1,000 improvements made?) Basically, Ive been told to avoid the first generation models (98 onward) Just wondering when the first major improvement might have occured and what is deemed a 2nd generation M class. Hope this makes sense and that Im on the right track. Regards, Scott.

Let me put it this way. If I buy another ML, it will be a 2002 or newer. The '98's and '99's are the worst in reliability, IMHO. They had the flaky and expensive sporadic AAM (all activity module) problems. The newer ones are much improved. 

The AAM problems are quite talked about from forum to forum. What happens is they quit recognizing keys and the dealer sells new keys to replace the 'bad' ones. Each time a new key is programmed, after awhile it loses the programming annd a new key again. Once you are up to 8 keys, it's over for your AAM and a new one is over $3,000. What makes people so sore about it is because many of these keys were replaced under warranty and when the warranty ran out, then it was revealed to the owner that his AAM was bad. This didn't happen to all ML's but 98-00 were the worst for this to happen.

Note that I own a '99. While my recent reliability has been great, earlier problems (especially those the first owner had) were ridiculous. My tranny has been superb but I know those who have had tranny failures before 50,000 miles with these so called sealed for life trannys. Mine has 165,000 miles and shifts smoothly and I don't experience the erratic downshifts some have talked about plagueing their ML430's.

You've had good luck with all 3. That's great. You beat the odds astronomically. Overall average, the 98 and 99 models are trouble prone and the 00's aren't much better.

BTW, how many miles do you have on each? Have you ever had the harmonic balancers changed or failed?