Mercedes forced to recall hundreds of thousands of cars

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However, the problem is thought to affect over 770,000 vehicles Europe-wide. This recall follows after Scheuer met Mercedes-Benz chairman, Dieter Zetsche, in Berlin to discuss what has been described as "irregularities in independent test results of various Mercedes-Benz models featuring the German auto maker's turbocharged four-cylinder diesel engine".

According to the authorities, the cars use an illegal shut-off device that reduces exhaust gas cleaning when the vehicles are being driven normally on the road.

The majority of the cars to be recalled are GLC sports utility variant of sedan, Vito vans and C-Class sedan.

Diesels have been under heavy scrutiny since U.S. authorities caught Volkswagen using illegal engine control software that turned off diesel emission controls in everyday driving.

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Daimler said last month it would appeal against an order by the KBA to recall the Mercedes van Vito 1.6l Diesel Euro 6 model, following a transport ministry investigation.

Dieter Zetsche, CEO of German vehicle maker Daimler arrives for a meeting at Germany's Traffic and Infrastructure Ministry in Berlin on Monday, June 11, 2018.

Daimler has pledged to work on removing the software and to cooperate with authorities, the ministry said.

Across Europe a total of 774,000 diesel vehicles contain "defeat devices" and Daimler said it would recall them all.

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Earlier Daimler chairman, Dieter Zetsche, had said a technical solution had been found to the software problems and that he did not expect the company to be fined.

At the time of the allegations, FCA CEO Sergio Marchionne struck a similar tone to Daimler; both automakers said the emissions control devices were legal.

The software cheat in question is the much-reported "Thermal Switches" which Daimler, Opel, PSA and others have used as a loophole to pass NOx emission requirements at laboratory temperatures.

Evercore ISI analyst Arndt Ellinghorst predicted the costs for the required software update for Daimler would be less than 100 million euros ($118 million).

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'Overall, this outcome should de-risk the stock'. The company also repeated its denial of having cheated on emissions tests in any way, the way Volkswagen had done 3 years ago.

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