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On my 87 OM603 turbo I have a 3" interior diameter straight through exhaust to a really obnoxious magnaflow muffler thanks to the previous owner. Stock exhaust was 2.75" with trap oxydizer, resonator and muffler. Not exactly ideal. A 2.5" + muffler should be more than enough for your engine.
Your transmission won't bolt up to OM60x engine, you'll need to get the 5 spd too. OM601 was most likely to find a manual.
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