Nothing happened. They have always had a terrible reputation for quality, and the results show it. People buy it for the brand name, and that's about it.
The W126 was a fairly simple car though, compared to their modern offerings, and it was built under a philosophy of building the best car regardless of cost.
My W140 was a also a well made car, great quality in materials and mechanical fundamentals, but it was too complicated and quite a bit more problematic for me.
Modern Mercedes-Benz cars don't seem as distinguished or well built as their offerings from the 1980s. With that said, my C216 CL-class is a very well built car in terms of materials and general attention to detail; it's just too complicated with hurts its overall reliability (though the powertrain is decently solid).
I have driven lots of them in 90s-20s and thought it were the best cars. And it were.