Gardaí say they have no definite line of inquiry about the explosion which occurred in Letterkenny in the early hours of Friday morning.
The explosive device detonated under a jeep at Manor View park in the Long Lane area of the town. Residents say the device went off at around 3.30 am. Nobody was hurt in the incident but gardaí say extensive damage was caused to the Mitsubishi Pajero which was parked on the street outside a house. All the houses in the cul de sac were evacuated and residents had still not been allowed to returned home late on Friday afternoon.
Speaking to the Donegal Democrat Inspector Goretti Sheridan said that gardaí were not aware of any link to dissident republicans and no definite line of inquiry had been established.
Local sources say the incident could be linked to a long-running feud.
Gardaí are to carry out door to door inquires when residents return to their homes and have begun the process of examining CCTV footage. Detectives are interested in tracing a silver saloon car that was seen in the area around the time of the explosion.
A forensic examination of the scene began around lunchtime on Friday after the area was declared safe by an army Explosive Ordnance Disposal team.