Diesels have been under heavy scrutiny since United States authorities caught Volkswagen using illegal engine control software that turned off diesel emission controls in everyday driving.
The Mercedes-Benz star is displayed on the front of a Mercedes-Benz vehicle at the annual news conference of German auto giant Daimler AG in Stuttgart, southwestern Germany, on February 1, 2018.
Germany's Transport Ministry has ordered an official recall for 238,000 vehicles sold in Daimler's home market.
The affected diesel models found to be fitted with these devices are the C-Class, Vito and GLC models, as these were the main ones affected.
The recall was announced after meetings on Monday between Daimler executives and Germany's top regulator failed to resolve the issue, which related to unapproved software functions found in the carmaker's Euro 6 diesel engines, according to a report in Bloomberg. In all, the agency believes that this tallies up to around 1 million vehicles across all of Europe.
The automaker says it is cooperating fully with the German Transport Ministry and KBA investigation; Daimler CEO Dieter Zetsche met with the German Transport Minister on June 11 to discuss the report.More news: Spain boss Lopetegui to take Real reins after World Cup
Since then, Daimler has pledged to remove the illegal software and co-operate with authorities.
A Daimler spokesman confirmed the recall to AFP, adding "legal questions will be cleared up in the appeal procedure" against the transport ministry decision.
This latest development follows news past year that saw Daimler accused of selling over one million cars with excess emissions in Europe and the United States, following earlier reports in the German media. For Mercedes-Benz, that means its cars switched off the emissions controls below nine degrees and above 26 degrees to guarantee its systems would survive over the vehicle's lifespan.
"We don't see any evidence that Daimler was designing software to deliberately cheat on emission testing", Ellinghorst commented to Automotive News.
Evercore estimates the recall will cost Daimler less than €100 million ($155.33m), helped by the fact no fines are now being imposed.