On a 4matic, hydraulic fluid leaks into the transfer case (which is filled with transmission fluid). The transfer case fills, and eventually overflows spilling fluid onto the exhaust. In some cases, this causes a lot of white smoke while driving.

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07 E350 4Matic wagon, 06 S430 4Matic, 99 SLK 230
retired W210 (x3), W124, W126