Hybrid vehicle sales fall for first time; automakers bet on new models for Q4 rebound

Domestic hybrid vehicle sales have declined for the first time this year. Analysts point to a combination of demand shifting toward electric vehicles and supply-side headaches — production disruptions at Hyundai Motor and Kia, along with aging model lineups. However, the industry is cautiously optimistic about a fourth-quarter rebound, with the new Tucson from Hyundai Motor and the Genesis GV80 Hybrid both hitting showrooms.

Cumulative new registrations of hybrid vehicles — including mild hybrids — reached 421,199 units from January through September, down 3.9 percent from the same period last year, according to the Korea Automobile & Mobility Industry Association.

It marks the first year-on-year decline for the January-to-September period since fuel-type registration data began being compiled in 2013. Hybrids' share of total new vehicle registrations also slipped 0.4 percentage points to 34.1 percent.

Hybrid sales had grown consistently over the years on a January-to-September basis — from 22,181 units in 2013 to 46,333 in 2016 and 73,165 in 2019. In 2020, the segment crossed the 100,000-unit threshold for the first time, recording 110,016 units.

By 2021, hybrids accounted for 13.1 percent of total sales — the first time the segment's share exceeded 10 percent — with 174,347 units sold. Last year, sales reached 438,170 units, representing a 34.5 percent share.

Both demand and supply factors are cited as drivers of the hybrid segment's slowdown this year. On the demand side, analysts suggest that consumers who had shifted from internal combustion engine vehicles to hybrids are now beginning to move on to electric vehicles. Hybrids had drawn attention as a practical alternative during years of sluggish EV demand, but that appeal appears to be fading as the electric vehicle market recovers.

New EV registrations jumped 74.8 percent year-on-year to 296,801 units from January through September. While sales of gasoline, diesel and liquefied petroleum gas vehicles all fell, electric vehicles posted standout growth.

Kia sold 104,370 electric vehicles — up 112.3 percent from last year — led by the EV5, EV4 and PV5. In the import market, Tesla sold 89,148 units, a 104.4 percent increase, driven by the Model Y and Model 3.

Gasoline vehicle registrations fell 19.4 percent to 386,533 units, ceding the top spot by fuel type to hybrids. Electric vehicles ranked third, followed by LPG vehicles at 91,965 units and diesel vehicles at 29,712 units.

On the supply side, production disruptions at Hyundai Motor and Kia and aging model lineups are seen as key factors. A fire at parts supplier Ahn Jeon Industrial in March delayed deliveries of several major models, with a significant number of those reportedly being hybrid variants.

For Hyundai Motor, some analysts say consumers held off on purchases because new hybrid versions of key models — including the Avante, Tucson and Grandeur — were concentrated in the second half of the year. At Kia, major hybrid models such as the Sorento, Sportage and K8 are seen as aging relative to the brand's electric vehicle lineup, which is believed to have weighed on sales, with the Seltos being a notable exception.

Meanwhile, the industry expects hybrid demand to rebound in the fourth quarter as the new Tucson and GV80 Hybrid arrive in quick succession. The Tucson is one of Hyundai Motor's best-selling nameplates — last year it became the first SUV in the Hyundai Motor Group to surpass 10 million cumulative global sales. The fifth-generation full redesign, dubbed "The All New Tucson," is the first in six years and comes with two powertrain options: a 1.6-liter turbocharged gasoline engine and a 1.6-liter turbocharged hybrid. The new model is also larger than its predecessor.

Genesis launched the GV80 Hybrid this month, powered by a 2.5-liter turbocharged hybrid system. The model pairs a 2.5-liter turbo engine with a next-generation parallel hybrid setup comprising a starter motor (P1) for engine starting and power generation, and a drive motor (P2) with a peak output of 59.1 kilowatts for propulsion and regenerative braking. It is Genesis's first hybrid model, designed to deliver a luxury electrification driving experience.