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THIS auto stock is tipped to double in 2016

Volkswagen stock-holders may be about to see some light at the end of the tunnel.

One analyst believes the stock is ready to accelerate as VW attempts to put its diesel scandal behind it.

"I think it is the biggest stock for the year. It is the biggest turnaround story for autos and I think the stock can double", Arndt Ellinghorst, Head of Global Automotive Research at Evercore ISI Group told CNBC on Monday.

He says VW's reputation is holding up well against the diesel scandal.

"The VW brand is behaving relatively well. If you take out some of the cars that they couldn't sell because of the CO2 cheat in Europe or the diesels in the U.S, it tells you that the brand still has very strong substance."


CEO Mueller to remain

Volkswagen CEO Matthias Mueller addresses a news conference at Volkswagen's headquarters in Wolfsburg, Germany, on September 25, 2015.
Fabian Bimmer | Reuters
Volkswagen CEO Matthias Mueller addresses a news conference at Volkswagen's headquarters in Wolfsburg, Germany, on September 25, 2015.

Ellinghorst's prediction comes amid an unrelenting drumbeat of bad news for the German carmaker.

New chief executive Matthias Mueller visited the U.S. last week for the first time since the diesel emissions scandal broke.

However his planned charm offensive failed when the California Air Resources Board rejected VW's submitted recall plan on Thursday.

Ellinghorst said despite missteps on the trip, Müller will remain as boss for now.


"I think he will survive this but I see Mueller as a transitionary CEO. He's going to deal with the scandal, he's going to restructure Volkswagen and then someone else will take over."

The auto industry may soon be required to carry out real world driving testing for emissions.

Arndt Ellinghorst says if introduced the cost to car manufacturers could be 300 euros-500 euros for each car.

"It doesn't sound a lot but in an industry that's struggling to make money, that's huge," he said.

Renault in the headlights

Meanwhile French auto manufacturer, Renault will hope to put to bed suspicions that it has been deceiving customers on its emissions.

Renault shares fell by over 22 percent last Thursday on reports that the carmaker's offices were raided by authorities.

Renault is set to face a French government commission today and is expected to explain why emissions from some of its models have varied so wildly under different test conditions.

Arndt Ellinghorst said the French government itself may have some explaining to do.

"Everyone was surprised hence the drop in the share price. It was then established that there was not VW style defeat device. So the question is why did the government target Renault?"