Daimler will recall 3 million Mercedes diesel cars for $255 million fix

This after German lawmakers last week summoned Mercedes-Benz executives to question them about emissions. At the time, the carmaker agreed to undergo another round of emissions tests.

"The company is investing about 220 million euros. The service actions involve no costs for the customers," Daimler said in a statement on Tuesday, adding that the updates would commence in the coming weeks.

Daimler further said it would roll out its new four-cylinder OM 654 diesel engine, first launched in the new E-Class in 2016, across its entire model portfolio.

After Volkswagen confessed to deliberate emissions cheating in 2015, the entire auto industry has come under scrutiny, suspected of producing excessive nitrogen oxide emissions in diesel cars, a greenhouse gas also blamed for causing respiratory disease.

In May, 23 prosecutors and around 230 staff, including police and state criminal authorities, searched Daimler sites in Germany following allegations of false advertising and the possible manipulation of exhaust-gas treatment systems in diesel cars.

Daimler has said its vehicles are road legal, but also warned investors in its quarterly report that steps by U.S. authorities to investigate "functionalities," including some which it said were common in diesel vehicles, could lead to significant penalties and vehicle recalls.