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Daimler AG (DDAIY)  shares fell sharply in Frankfurt Tuesday after the luxury carmarker said German authorities searched the company's offices in Stuttgart as part of an ongoing probe into emissions manipulation.

Daimler shares were marked more than 1.11% lower at €67 each by 15:20 CET after trading in positive territory for much of the session. The benchmark DAX performance index, by contrast, was quoted 0.31% higher while the Stoxx Europe 600 Automobiles and parts index was seen 0.63% lower on the session. 

"In connection with its preliminary investigations of known and unknown employees of Daimler AG due to suspicion of fraud and criminal advertising relating to the possible manipulation of exhaust-gas after treatment in passenger cars with diesel engines, the Stuttgart public prosecutor's office is about to search premises of Daimler AG at several locations in Germany," Daimler said in a statment. "The company is fully cooperating with the authorities."

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"Daimler AG has already provided information on governmental information requests, inquiries and investigations in annual reports and interim reports; in Interim Report Q1 2017, this also included the possibility of searches of Daimler premises," the company said.

In its last quarterly earnings statement, publish on April 26, Damiler aid its sees sees "significant" earnings growth for the coming year after confirming that its first quarter operating profits surged past €4 billion but also noted that it is "subject to governmental information requests, inquiries and investigations as well as litigation relating to environmental, securities, criminal and other laws and regulations in connection with diesel exhaust emissions."

Daimler said sales for the first three months of the year grew 11% to €38.8 billion, slightly ahead of the 10% increase in until sales, which rose to 754,300 over the three-month period, a company record. The group said it sees "significant growth in unit sales, revenue and Group EBIT" for the coming year.

The parent company of Mercedes said late Tuesday reported first-quarter earnings before interest and taxes of €4.01 billion ($4.25 billion), up from €2.2 billion in the same quarter last year. Mercedes-Benz led the group in the quarter, with EBIT of €2.23 billion, up 37% from the first quarter in 2016.

The company last week said earlier this month that more Mercedes were sold in March than ever before, with sales rising 14.8% to 228,296 to cap a best-ever quarter where 560,625 were ultimately shifted.