Toyota, Honda Post January Gains as Hybrid Boom Eclipses EV Slump

Published: February 13th, 2026

Toyota and Honda reported higher January sales driven by surging demand for cars and hybrids, even as their top-selling crossovers stumbled and severe winter storms kept shoppers home across much of the country.

Kia turned in a record January with 64,502 vehicles sold, up 13 percent from a year earlier, marking the brand’s seventh straight month of growth. The gains came largely from sedans—the K5 jumped 44 percent while the K4 rose 2 percent—as six models hit January records.

Hybrids dominate as EV sales crater

The January numbers underscore a dramatic shift in the U.S. auto market: hybrids now account for roughly 22 percent of new car sales, up from about 15 percent a year ago, while electric vehicle sales have collapsed following the expiration of the $7,500 federal tax credit last September.

Hyundai reported hybrid sales jumped more than 60 percent in January, led by the new Palisade hybrid at 8,604 units—up 29 percent year-over-year—and the Santa Fe hybrid at 9,011 units, up 9 percent. The company’s overall sales reached 55,600 vehicles, a 2 percent increase.

“Hybrid demand was the star of the month, up more than 60 percent,” said Randy Parker, president and CEO of Hyundai Motor North America. He acknowledged the tax credit expiration “temporarily disrupted the market” for EVs but expressed confidence the segment would stabilize.

Kia’s electrified lineup—including hybrids like the Carnival, Sportage, Sorento, and Telluride—rose 45 percent compared to January 2025. That performance helped offset steep declines in pure electric models: the EV6 fell to 540 units, down 65 percent, while the EV9 dropped 45 percent to 674 units.

Toyota and Lexus sold 79,561 electrified vehicles in January, representing 45 percent of their combined sales but down 6 percent from the prior year. The decline marks a potential plateau for Toyota, which has dominated the hybrid market for two decades but now faces aggressive competition from Korean brands expanding their electrified offerings.

Tax credit expiration reshapes buyer behavior

The end of the federal EV tax credit in September 2025 pulled forward demand throughout the summer and fall, leaving dealerships with bloated inventories and tepid buyer interest heading into 2026. Hyundai’s IONIQ 5 fell 6 percent to 2,126 units in January, while the IONIQ 6 plummeted 61 percent to just 344 units. The newly launched IONIQ 9 managed 580 sales.

Honda’s Prologue EV dropped more than 80 percent, according to industry data, as buyers shifted toward the brand’s hybrid models instead.

The market reset comes as the Trump Administration signals potential changes to vehicle electrification policy, adding uncertainty to long-term EV planning for automakers that have committed billions to electric platforms.

Full-year 2025 U.S. auto sales reached 16.39 million vehicles, up 2.7 percent, with Hyundai and Kia posting their third consecutive annual records despite the fourth-quarter EV slump. In October alone, Hyundai’s IONIQ 5 and 6 fell roughly 56 percent while Kia’s EV9 and EV6 dropped 57 percent—declines offset by double-digit hybrid growth.

Korean brands challenge Japanese dominance

Kia and Hyundai’s momentum in January highlights a broader competitive shift. While Japanese brands have long controlled the hybrid segment, Korean automakers are rapidly closing the gap with newer models and aggressive pricing.

Toyota’s 45 percent electrified mix—once an industry benchmark—now appears vulnerable as Hyundai and Kia add hybrid variants across their lineups. Analysts note the Korean brands still have room to grow hybrid penetration, potentially reaching Toyota’s levels within two years if current trends continue.

Japanese rivals struggled in recent months. Honda posted a 15.3 percent decline in December, Nissan fell 7.7 percent, and Subaru dropped 9.7 percent, hampered by supply constraints and production issues.

Kia’s seven-month sales streak—extending from July 2025 through January 2026—reflects not just hybrid strength but success across segments. The brand’s SUV lineup, including the Telluride and Sportage, continues to gain market share, while sedans like the K5 defy industry-wide car sales declines.

Incentives pile up as inventory swells

Dealerships are responding to softening demand with aggressive promotions. Kia offered up to $2,000 cash back and zero-percent financing on select models in January, with similar deals extending into February. Some dealers are advertising lease incentives reaching $10,000 on certain vehicles as lots fill with unsold inventory.

The combination of overflowing dealer lots and winter weather disruptions—which sidelined shoppers across the Midwest and Northeast in January—is expected to keep pressure on pricing through the first quarter.

For buyers, the environment presents opportunities. Hybrid models offer immediate availability without the charging infrastructure concerns that have slowed EV adoption, while financing deals make monthly payments more manageable despite elevated vehicle prices.

Industry watchers will be monitoring February and March sales data to determine whether January’s trends—strong hybrids, weak EVs, and weather-dampened traffic—represent a temporary blip or a sustained market shift. With new hybrid variants from multiple brands launching this spring, competition in the electrified segment is only expected to intensify.

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