Bavaria would become the first German state to sue Volkswagen for damages over its emissions scandal next month, news agency DPA reported on Tuesday.

The southern German state's pension fund held around 58,000 preferential shares in the carmaker, which has been reeling since it came to light it was using software to cheat on emissions tests.

Informed too late?

As a result, Volkswagen shares dropped and temporarily lost over 40 percent in value, inflicting big financial losses on investors.

Bavaria now seeks damages of up to 700,000 euros ($783,000), finance minister Markus Söder told news agency DPA.

He said Volkswagen had neglected its obligation to notify investors of the practices within the company at the earliest possible stage.

While the total sum Bavaria is seeking might not be excruciatingly high, it could yet pose a danger to Volkswagen.

If the claim is successful, it could set a precedent for other shareholders to sue as well.

mrk/hg (dpa, Spiegel)