FT: US hybrid demand surges as Asian carmakers command 86% of market

Demand for hybrid vehicles in the US rose sharply in July as petrol prices remained high, benefiting Asian carmakers including Toyota, Hyundai and Honda.

Hybrid sales increased by almost 20% compared with July last year, even as overall US car sales fell by 1.5%, according to RBC Capital Markets, according to Financial Times (FT).

Hyundai sold 43,727 hybrid vehicles in July, a 62% increase from a year earlier. Toyota's hybrid sales rose by 22%, while Honda recorded a 15% increase.

The three Asian manufacturers now account for 86% of the US hybrid market, according to auto consultancy Baum & Associates.

The shift comes as petrol prices in the US have risen to just over $4.06 a gallon, up by about a third from a year ago. The higher prices have boosted interest in hybrids, which offer improved fuel efficiency without requiring drivers to change their usual refuelling habits.

“Hybrids are delivering the sweet spot consumers are looking for,” said Jessica Caldwell, head of insights at Edmunds.

By contrast, demand for electric vehicles has weakened since the Trump administration withdrew a $7,500 consumer tax credit for EVs last year.

Tesla owners are also increasingly switching to non-electric vehicles. According to Edmunds, a record 21% of Tesla owners trading in their cars are choosing hybrids, with Toyota accounting for more than 17% of Tesla replacements.

The trend has put pressure on Detroit's major carmakers, which have traditionally offered fewer hybrid models.

General Motors, which has two hybrid models on the US market, recorded a 33% fall in electric vehicle sales in the second quarter compared with a year earlier. Ford's EV sales dropped 75% in July as it phases out some models ahead of a new low-cost EV platform planned for next year.

GM is now exploring ways to reintroduce more hybrid vehicles, while Ford plans to offer hybrid versions across its petrol-powered range by 2030.

Ford, GM and Stellantis are also developing extended-range electric vehicles, which use a small engine as a generator to recharge the battery. The technology is seen as particularly suited to the large pick-up trucks popular in the US.

Despite economic pressures, US new-car sales have remained relatively resilient. Cox Automotive expects full-year sales to reach 16 million vehicles, slightly above its earlier forecast of 15.8 million.

Charlie Chesbrough, senior economist at Cox, said “stubbornly high gas prices — with no relief in sight — and historically weak consumer confidence have not discouraged new-vehicle buyers, as might be expected”.

But he added that “the market today is being driven by more affluent buyers, so they may be less impacted by inflationary pressures and economic uncertainty”.

By Aghakazim Guliyev