The first report of the allegations came from the German news magazine Focus, which reported that several employees had been caught intentionally producing defective cars. By producing these defective cars, Daimler's internal quality control measures would require an external company to repair the cars, and essentially the employees were drumming up business for this firm, with the firm allegedly providing rewards of expensive gifts and overseas holidays in return.
The preliminary investigation is attempting to ascertain whether the employees had in fact produced defective cars intentionally, however Daimler has already come out with a statement stating that there are no defective cars on the market, or defective parts. From what we can gather, this makes sense as the employees were allegedly producing defective cars with the key purpose of having them repaired by this external firm, and not with the purpose of intentionally releasing defective cars to market.
While there are no concrete facts or figures as to the number of defective vehicles produced, one German news source estimated that the losses incurred by Mercedes could be in the millions of Euros range.