2021 GLE 350 4matic is extremely slow off the line. Feels like a delay/lag after the pedal is pressed before the car gets moving, even in sport mode. Or to explain differently, feels like I'm pressing the pedal halfway down before the car even starts moving.

Might just be the 4-cyl at work for a heavy car, but this feels much "laggier" than my old 2005 MDX, and is absolutely no-contest to a current loaner X5. Read somewhere that there was a factory reset procedure for older GLE's that had insertable keys. Does anyone know if a similar procedure exists for the current V167? Or is this lag indicative of all v167s?

My 2020 GLE 350 4matic has a noticeable power hole off the line. I would believe it's turbo lag and the nature of the beast and I've just gotten used to it.

My wife continuously complains about the big hesitation when entering traffic from a side street. I've spoken to the dealer about the issue and they say that's pretty much how it is. It doesn't hesitate every time just enough to make my wife paranoid about the issue.

It's Turbo Lag. Normal on turbo cars without an ISG.
Most people become used to how a car responds to the right foot, and adapt their driving styles to the car.
That includes those with 0-60 times under 4 seconds. You adapt.

Unless the husband is looking on and offering advice. Then it can get frustrating.
(Ask me how I know.)

Does it improve if you turn off the stop/start feature?

Good point.
It might, but I wouldn't expect merging with traffic or pulling into an intersection would start with the engine off.

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The downside of a small turbocharged engine, you have to wait for the exhaust gasses to spin up the turbo and start increasing airflow through the engine before the power comes up. From a stop you can use two feet (brake + light accelerator) to begin building that airflow before you actually go. On the highway simply mash the throttle instead of rolling into it. With electronic accelerator pedals now days they take into account pedal position as well as % of input change. Rolling into 50-75% throttle will give you a different response that a quick stab to 50-75% throttle.

Heavy car, 4 banger, turbo lag. Best thing to do is keep it in “S Mode” that is really all you can do.