Oil prices continue to be high, leading Americans to favor purchasing hybrid cars and showing a preference for Asian car brands.
According to a report by CNN on October 3, South Korean car manufacturer Hyundai reported a 39% increase in hybrid car sales in the third quarter, while Kia’s hybrid car sales increased by 152%. Japanese car manufacturers also reported unusually strong hybrid car sales this quarter, with Toyota’s sales growing by 29% and Honda’s by 21%.
Since the outbreak of the war with Iran at the end of February, gasoline prices have soared. American car buyers are now looking for more fuel-efficient cars, such as hybrids. However, unlike Japan and South Korea, most American car manufacturers have very few hybrid models in their product lineup.
Ivan Drury, director of the car buying website Edmunds, said, “This proves how important it is to have the right product at the right time, but you can’t predict that as you would hope.”
Pure electric car sales have declined significantly over the past year. They are more expensive than gasoline-powered cars, especially after the $7,500 tax credit for electric cars ended last September. Tesla, the largest electric car manufacturer in the United States, reported a 2% year-on-year decline in sales in the third quarter.
However, hybrid cars that combine gasoline engines and electric motors are much cheaper.
Drury said, “I think this is one of the most obvious examples, illustrating how consumers find hybrid cars more satisfying and at a lower price than electric cars.”
The growth in hybrid car sales has almost made South Korean cars surpass Ford in US sales for the first time.
Hyundai and Kia’s combined sales in the third quarter were 506,200 vehicles, up 5.4% year-on-year. Ford is the third-largest car manufacturer in the United States, and according to data released by the company on Friday, its sales declined by 6.6% to 509,764 vehicles. (As Hyundai owns a significant stake in Kia, most analysts count them together when ranking sales.)
In 2007, Ford gave up the title of being the second-largest car manufacturer in the United States to Toyota, part of the trend over decades of a shift towards Asian car manufacturers. Asian brands entered the US market in a big way during the oil price shocks of half a century ago.
Cox Automotive reported that Asian car manufacturers sold over half of the new cars in the United States this quarter, while American companies hit a historic low in market share.
An economist at Cox Automotive said, “With limited hybrid options and few passenger car products from (Detroit car manufacturers), this trend seems likely to continue.”
For decades, the Big Three Detroit companies have stopped producing fuel-efficient sedans and small car series, instead focusing on producing high-profit margin large SUVs and trucks. Before the war in Iran, American consumers had no issues buying large, gas-guzzling vehicles.
But as the national average gasoline prices soared above $4 per gallon, American buyers are starting to pay attention to fuel efficiency once again, giving US companies no choice.
Ford only has a hybrid midsize truck, the Maverick, and discontinued the hybrid Escape SUV. Due to reduced supply of Escape cars, sales of all versions of Escape dropped by 85% this quarter. General Motors has only one hybrid model, a version of its niche Corvette sports car. Stellantis announced in January that it would gradually phase out plug-in hybrid models in North America.
While Ford and General Motors both plan to introduce more hybrid models in the coming years, changing course takes time.