How Carmakers Could Capitalize On VW Scandal

Over the past week, Volkswagen AG (ADR) VLKAY has been working to stem a crisis caused by faulty emissions sensors that regulators say were designed to cheat their testing process. While investors with an appetite for risk are buying shares of the German carmaker in hopes that the firm will recover, more conservative traders are looking to other players in the auto industry who are using the scandal as a foothold to boost sales.

Taking Customers

Companies like Ford Motor Company F and Fiat Chrysler Automobiles NV FCAU are offering incentives to current Volkswagen owners for trading in their cars and buying a new brand. They are hoping that the VW owners will be tempted to switch over after reports that the value of Volkswagen cars has decline by about 13 percent over the past month.

Related Link: Volkswagen's Risks May Be Overlooked Despite Press Disaster, Analyst Warns

In European countries, the deals are aimed at converting loyal VW customers as carmakers are hoping to gain marketshare from the German brand, which has a market share of around 25 percent. While the dealer schemes could be effective in capturing new customers, both Ford and Fiat have been tight-lipped about the success of the program so far.

Electric Cars

Many are expecting this emissions scandal to bolster support for green vehicles like electric cars. Tesla Motors Inc TSLA has been one of the most popular electric car investment options, but other companies like Toyota Motor Corp (ADR) TM and Nissan Motor Co NSANY have been gaining marketshare in the field as well. Components makers like Plug Power Inc. PLUG, which manufactures the batteries used in electric vehicles, are another way to gain exposure to the trend.