Will Volkswagen Ever Come Out From Under Its Emissions Scandal?

On Tuesday, German carmaker Volkswagen AG (ADR)(OTC: VLKAY) reported lackluster results, as the company continued to struggle with last year's emissions scandal. U.S. sales fell 14.6 percent, and almost all of the company's car models saw year-over-year sales decline.

However, although the diesel scandal is continuing to weigh on the firm's bottom line, many say that the company is likely to recover in the coming year.

Brand Damage

It remains unclear just how the emissions scandal has affected customers' perception of the VW brand, but many expect the answer is probably not much. Because the Environmental Protection Agency has barred the automaker from selling its diesel models in the United States until the firm has demonstrated that the faulty emissions sensors have been removed, customers haven't been given the chance to prove whether they're willing to trust Volkswagen again.

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At the moment, the EPA and Volkswagen are still working out what will be necessary to resume diesel sales in the United States, meaning that VW dealers are unable to offer the models that typically make up over 20 percent of the company's U.S. sales.

Things Looking Up

Outside the United States, Volkswagen appears to be overcoming the negative press that its emissions scandal created. In France, the German automaker overtook domestic brands like Renault and PSA Peugeot Citroen in new car registrations in January.

The data falls in line with predictions from Arndt Ellinghorst, head of Global Automotive Research at Evercore ISI Group. Ellinghorst told CNBC that he sees Volkswagen's stock doubling in the coming year, as the firm gets out from underneath its emissions scandal once and for all. He said the company's reputation has suffered relatively mild damage from the ordeal and that once the diesel cars are back on the market, the company has a good chance of making a solid recovery.

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