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When you talk about towing the one factor that comes into play is torque. The 3-53 is probably OK for a Ranger size truck but not a powerhouse. The 4-53T would be much better but you run into a problem with engine weight and physical size there. The VW diesels tend to be similar in power characteristics but don't have the torque and you can only expect so much from an engine around 2.0 L. They can be modified for more HP but the torque is on the low side. Here's a recent post of a vehicle and trailer of similar load to yours. Yukon road trip He's using a Cummins 4bt tuned to near 300 HP. Your 3.53 has 205 lb ft of torque @ 1800 RPM. His 4bt Cummins is probably well past 600 lb ft which is 3 times the power you currently have. Now you don't have to have 300 HP to do what you want but somewhere around 200 HP would be more reasonable than the 105 HP on your 3-53. Possibly one of the Mercedes 5 cylinders might be possible. They don't have the super high torque of a Cummins but might be better than the VW.
 

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Scot, your finding is pretty much correct. The smaller automotive diesels like VW or Mercedes can move the small pickup around just fine and can tow on mostly level ground. When exposed to more serious towing they tend to start losing the battle. That word "torque" comes into play and although they can have the HP it's the pulling power they don't produce. Their engines were designed for a car. Your 3500 lbs is the max rated towing for a Ranger.
 
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