On November 9, 2026 (U.S. time), Honda announced that it will invest $3 billion to build a new automobile plant in Ohio, adding annual production capacity of 240,000 vehicles starting in 2029. The move reflects growing demand for hybrid vehicles in North America. According to research firm Cox Automotive, hybrids accounted for 16.3% of the U.S. new-vehicle market in the second quarter of 2026, up from 13.0% a year earlier and a record high. Soaring gasoline prices likely pushed demand higher, but a look at sales by automaker reveals another shift. In that quarter, the year-over-year increase in hybrid registrations for Kia and Hyundai combined was roughly 2.1 times Toyota's, indicating that the growth in the market is being driven by a broader range of manufacturers.
Honda Plans a 240,000-Unit Plant as Gas Prices Lift Hybrid Demand
According to Honda's announcement, the new plant will be built between its East Liberty and Marysville plants in Ohio and will create more than 2,000 new jobs. Production is scheduled to begin in 2029, subject to final government approval. Once complete, Honda's automobile production capacity will reach about 1.3 million vehicles a year in the U.S. and about 1.9 million across North America. At its transmission plant in Ohio, Honda is also converting an existing line into a second hybrid-system line, which is expected to raise hybrid-system production capacity in the state by 250%.
In May 2026, Honda announced plans to launch 15 new hybrid models of Honda and Acura vehicles worldwide by 2030. The new plant is part of building the production base needed to support that wider lineup. Honda expects hybrid sales to grow, mainly in North America, and is strengthening its supply system not only for vehicle assembly but also for engines and hybrid systems.
One major factor behind the demand growth was the spike in gasoline prices that followed the start of the Iran war in late February 2026. According to an analysis by the U.S. think tank Resources for the Future (RFF), U.S. gasoline prices rose from about $3.00 per gallon to about $4.50. Prices have since turned downward. According to data from the American Automobile Association (AAA), the national average for regular gasoline on November 15 was $3.8242, down from $4.0203 a week earlier. That is still above pre-war levels.
Sales of electric vehicles (EVs) tell a contrasting story. According to Cox Automotive's third-quarter 2026 tally, the share of new-vehicle sales going to battery electric vehicles (BEVs) rose from about 5.8% in the second quarter to about 6.4% in the third, but unit sales fell 39.5% from a year earlier. In the third quarter of 2025, a rush of buying ahead of the end of the federal tax credit pushed the EV share above 10%. Cox Automotive believes hybrids are now mainly what is driving electrification growth in the U.S. market.
Hybrid Growth Is Spreading Beyond Toyota to More Automakers
According to data Cox Automotive presented at its September 2026 sales forecast briefing, hybrid sales in the second quarter rose 23% from a year earlier. Toyota remains the largest player, with 44% of the hybrid market, but its share fell by more than 4 percentage points over the year. Ford's share also shrank, from nearly 10% to 6%.
In terms of sales gains by automaker, however, Korean brands are becoming more prominent. In the second quarter of 2026, the year-over-year increase in hybrid registrations was about 36,000 for Kia and about 30,000 for Hyundai. Toyota's increase was about 32,000. Kia and Hyundai's combined total of about 66,000 is roughly 2.1 times Toyota's. The calculation is 66,000 ÷ 32,000 = 2.0625, but because the underlying figures are rounded, the multiple is approximate.
Cox Automotive says Toyota is gaining sales volume but losing market share, and that more automakers are contributing to hybrid market growth. Subaru and Honda also posted solid hybrid sales gains. Meanwhile, the company's September 24 market forecast projected that the new-vehicle market share of the U.S. "Detroit 3" (GM, Ford and Stellantis) will come in at just over 36%, a record low. Cox Automotive cites these automakers' limited hybrid options as one factor. By contrast, the share of Asian automakers is expected to top 50% for the second straight quarter.
Production systems likely play a role in these differences between automakers. Building more hybrids requires setting up production facilities for engines and electric drive systems, and even when demand surges, it is hard to raise supply capacity significantly in a short time. Indeed, while Honda is converting existing production lines, it expects about three years between the announcement and the start of operations at the new plant. Automakers that were already selling a wide range of hybrid models when gasoline prices spiked were probably better positioned to capture the extra demand. In addition to Japanese automakers such as Toyota, Honda and Subaru, Korea's Kia and Hyundai have also benefited from the market's expansion.
That said, Toyota's relatively small gain also reflects its own supply constraints. According to Cox Automotive, the RAV4, Toyota's mainstay SUV, has had supply problems, and its year-to-date sales are down by about 100,000 units. The company believes that if the supply problems are resolved, Toyota could compete with GM for the top spot in U.S. sales. The figure of about 100,000 units refers to year-to-date sales of the RAV4 as a whole and is not directly comparable to the second-quarter increase in hybrid sales. Even so, the fact that the Kia and Hyundai increase was about 2.1 times Toyota's may reflect not only the growth of the Korean brands but also the effect of Toyota's supply shortfall.
Did Gas Prices or a Broader Lineup Drive Hybrid Demand?
One explanation is that the surge in gasoline prices was the main driver of hybrid sales growth, and that the differences in gains by automaker simply reflect demand flowing to companies that had the models and inventory to sell at the time. The RFF analysis shows that gasoline prices and the hybrid sales share changed sharply at around the same time. The share of conventional hybrids rose from about 14% in February 2026 to about 17% in the three months after the Iran war began.
RFF's analysis, based on data from Argonne National Laboratory, found that the gasoline-vehicle share of U.S. new-vehicle sales fell from 80% in February 2026 to 76% in May. From this change, it estimates that about 56,000 households bought hybrids or EVs instead of gasoline vehicles. Of these, about 38,000 households chose conventional hybrids and about 18,000 chose EVs, nearly all of which were plug-in hybrids (PHEVs). In other words, buyers who responded to higher gasoline prices tended to choose conventional hybrids and PHEVs over BEVs.
RFF suggests that PHEV sales grew faster than BEV sales possibly because many consumers thought the spike in gasoline prices would be temporary. If you expect fuel prices to fall soon, choosing a PHEV over a BEV can be a rational decision once purchase price and charging access are taken into account. However, there is no data directly measuring how consumers expected future fuel prices to move, so this explanation remains a hypothesis.
The automaker-level data also cannot cleanly separate the effect of gasoline prices from that of supply systems. Higher prices increased demand for hybrids, and which automakers were able to turn that demand into sales was probably shaped by the breadth of their lineups and their supply capacity. The fact that Kia and Hyundai recorded larger sales gains than Toyota suggests that conditions on the automaker side also mattered.
There are two main ways to test this view. The first is how the hybrid share changes as gasoline prices fall. If the 16.3% share of the second quarter of 2026 returns to the 13% range, close to the 13.0% of the same period in 2025, that would strengthen the explanation that the increase was a temporary result of higher prices. Gasoline prices have already been trending down, and the fourth-quarter 2026 sales data that Cox Automotive publishes will be a useful gauge.
The second is Toyota's sales after its supply recovers. If the RAV4's supply constraints are resolved and Toyota's year-over-year gain in hybrid registrations exceeds the combined gain of Kia and Hyundai, the roughly 2.1-fold gap recorded in the second quarter is more likely to have been temporary.
Honda also plans to build flexibility into the new plant so it can respond to such swings in demand. According to the company, the plant will be designed to produce not only hybrids but also gasoline vehicles and BEVs. Not all of the 240,000-unit annual capacity will be allocated to hybrids, and the models produced can be adjusted to market conditions and the progress of electrification. Ahead of the start of operations in 2029, whether hybrid demand persists after gasoline prices settle will be a key factor in the decision.