Hyundai and Kia nearly outsold Ford as $4 gas sends buyers to hybrids Detroit barely makes

Hyundai and Kia sold 506,200 vehicles in the U.S. in the third quarter, 3,564 short of Ford’s 509,764 and the closest the two Korean automakers have ever come to outselling the Detroit company, CNN reported Friday. Hybrids did most of the lifting. Hyundai’s hybrid sales rose 39% and Kia’s rose 152%, while Toyota was up 29% and Honda 21%.

Gas prices have climbed since the war with Iran began in late February, and the national average is now above $4 a gallon. Hybrids, which pair a gas engine with an electric motor, cost much less than fully electric cars. EV sales have fallen sharply over the past year, and the $7,500 federal tax credit for EV buyers ended last September. Tesla, the largest EV maker in the country, said its third-quarter sales fell 2%.

Detroit doesn’t have much to sell those shoppers. Ford offers one hybrid, the Maverick midsize pickup, after discontinuing the hybrid version of its Escape SUV, and sales of all versions of the Escape fell 85% in the quarter as dealer supply dried up. GM’s only hybrid is a version of the Corvette sports car. Stellantis, which makes Jeep and Chrysler, said in January it was phasing out its plug-in hybrids in North America. Asian automakers sold more than half of all new cars in the quarter, according to Cox Automotive, and U.S. companies hit a record-low share.

For decades the Big Three dropped fuel-efficient sedans and small cars to build SUVs and trucks, which carry higher profit margins, and until this spring American buyers kept paying for them. The lineup was a bet that gas would stay cheap enough for margin to matter more than mileage.

Washington just made that bet cheaper to hold. Days before the sales figures came out, the Trump administration announced looser fuel-efficiency requirements, which may save Detroit automakers fines when they miss mileage targets. On Friday, 26 states led by California sued, arguing the rollback “weakens fuel economy standards and hurts consumers and the planet.”

The rollback removes a penalty for a lineup that buyers are already penalizing. A missed mileage target produces a fine a finance team can plan around. A driver who switches brands is a loss that keeps showing up in later sales years. “The momentum that the Big Three have given up is tremendous,” said Ivan Drury, director of insights at Edmunds. “Repeat purchases is the lifeblood of automotive industry. If you lose somebody, clawing them back is the hardest thing you can do.”

Ford and GM both plan more hybrid models, but changing a lineup takes time. Charlie Chesbrough, senior economist at Cox Automotive, said that with limited hybrid options and few passenger cars from Detroit, “this trend seems likely to continue.”

That leaves the Big Three paying for the truck strategy at the dealership, in lost buyers, during the same quarter Washington made the regulatory bill for it smaller.

Sources

• CNN: Q3 US car sales and the hybrid surge