Daimler AG  (DDAIF) shares fell to the bottom of the Germany market Thursday after a report said Stuttgart prosecutors were probing the use of so-called defeat devices used to beat emissions tests in Europe and the United States.

German daily Sueddeutsche Zeitung cited a search warrant when it reported late Wednesday that the Mercedes-Benz maker is alleged to have used so called defeat devices in more than a million of its cars between 2008 and 2016. The report comes just days after the same office said it's investigating employees at Volkswagen AG's (VLKAY) Porsche unit for fraud and false advertising, both allegations which are also connected to the use of defeat devices in cars.

Daimler stock opened more around 3.5% lower Thursday, trading as low as €63.17 and pushing its year to date loss briefly over the 10% threshold, before paring losses to around 1.1% and stabilizing at €64.665 by 10:00 Frankfurt time. The downward move far outpaced the 0.55% fall seen in the Stoxx Europe TMI Automobiles & Parts index.

The only automakers to have suffered from regulatory and legal action over emissions technology contained in their cars are Volkswagen and Fiat Chrysler (FCAU) , with both subject to action in the U.S. alone. However, European politicians have frequently called for governments to take action against those who are found to have misled regulators and consumers. 

Mercedes-Benz overtook BMW (BMWYY) as the world's largest maker of luxury vehicles by volume in 2016 after sales rose to record levels, thanks to the new Mercedes E-Class Sedan and Wagon models which have been well received in all of the brand's core markets.

However, a strong 2016 share price performance coupled with political uncertainty over its North American manufacturing facilities in Mexico and the ever present threat of regulatory action over the ongoing emissions scandal have all weighed on the stock during the year to date.

"Daimler has experienced extraordinary tailwinds since 2013, driven by strong model mix (S Class) and support from key end-markets. With the mix increasingly fading, profit growth largely depends on volumes," saud Alexander Haissl, an analyst at Berenberg Bank, in a recent note.

Haissl has a sell rating and price target of €54.0 assigned to Daimler shares, implying 14% downside from current levels.  

If you liked this article you might like

Intermediate Trade: Germany ETF

BMW Just Unleashed Its Biggest-Ever Luxury SUV -- Here's the Secret Why

Cadillac Is Finding New Life in China