The Luchs is supposed to be shredding squads that sit outside cover. This is something we hope it is still does.
The counterplay to the Luchs is, and should be having your squads remain behind cover. The reason why cover modifiers are so steep is because Luchs ignores all other obstacles between the tank and the target. This is unlike other anti-infantry targets.
If we leave things as they were, the Luchs would have particular trouble dislodging MGs that sit in craters. Even if the Luchs is hugging the offending MG, crater cover would not get removed, and the Luchs would take longer to score the necessary hits.
If there's a light vehicle hugging an unsupported squad (which is the requirement for the close-combat mechanic), that squad had better retreat. Soviets/USF have bountiful access to Snares. Brits can always choose to delay their teching by a bit to buy some upgrades to support their forces.
We also don't want to leave squads behind yellow cover completely unprotected because, luchs accuracy does not care about obstacles inbetween, and Luchs also deals AoE. We might reduce the penalties vs green cover. However, for the time being, we feel that it is useful that a squad can take refuge between a particular type of cover to survive a luchs attack and/or bait the luchs to close in.
As I said with the current change the difference in damage from 11 to 10 is huge (X4) and will make the performance completely inconstant.
Luch is a unit (maybe the only) with some of the lowest modifier vs infantry in cover which makes very little seance since it is meant to counter infantry and not infantry out of cover.
By comparison and again making very little sense Centaur has the some of the highest (four times better).
Increasing the damage modifier to at least 50% (I would suggest 75%/100%) as other unit and adjusting damage if need seem to me to far better solution than having high damage only when closing in under 10 unit or out of cover.