Germany's Transport Ministry said on Monday that 774,000 Mercedes-Benz vehicles in Europe had been found to contain unauthorised software defeat devices and ordered Daimler to recall more than 200,000 cars in Germany.
"In addition, Daimler explains that with maximum processing speed and in cooperative transparency with the authorities, the applications in the engine control system objected to by the federal government are eliminated", Federal Transport Minister Andreas Scheuer said in a statement.
The Mercdes GLC is among the affected models
A Daimler spokesman said he would not comment on the BamS story, adding, "We are cooperating to a full extent and transparently with the KBA and the federal transport ministry".
Mercedes-Benz is disputing whether or not the devices are indeed illegal, but would not confirm how many vehicles they were installed in.
Since rival Volkswagen admitted in 2015 to cheating US emissions tests, German carmakers including VW, Daimler and BMW have faced a backlash against diesel technology in which they have invested billions of euros. That controversy has cost VW about $30 billion in fines.More news: United Kingdom minister resigns, plans to rebel over parliament's Brexit role
In the years since 2015, other German carmakers have also been forced to recall vehicles to fix manipulated software, although none has so far admitted to mass cheating as Volkswagen did. However, the KBA had taken issue with the emissions control features amid suspicion they allowed vehicles to emit excess pollution without detection.
Prosecutors raided Munich-based BMW in March, saying their investigation was "only just getting started" after gathering evidence, and announced on Monday they suspect Audi chief executive Rupert Stadler of fraud.
For their part, German firms have announced dozens of new electric and hybrid models for the coming years in a bid to bring down emissions of both greenhouse gas Carbon dioxide - the original reason they turned to diesel - and of harmful NOx.More news: Some lava evacuees in Hawaii may return to homes during 'stable' flow
"In our integrated emission control systems, there are several hundred functions interlocked with each other, which can not be considered independently from each other", a Daimler spokesperson told The Drive.More news: Manchester United make a Positive Start in the Transfer Window