Stellantis Falls, Hyundai-Kia Shine, Tesla Stumbles
The automotive landscape of 2024 revealed a troubling truth: vehicle prices are strangling sales potential. Wolf Richter’s detailed analysis on Wolf Street paints a stark picture of shifting market dynamics and the rising cost of car ownership. While Hyundai-Kia reached record highs and EV sales jumped 10%, the industry as a whole lags far behind its peaks of decades past.
Let’s call it what it is—automakers are pricing themselves out of relevance for many consumers. The average transaction price in December 2024 stood at $46,200, nearly unchanged from the prior year. This follows a 36% spike during the pandemic, leaving cars out of reach for a large swath of Americans. New vehicle sales, up 2.3% in 2024, remained about 9% below the year 2000, despite the U.S. population growing 20% since then. People simply can’t afford these prices.
Winners and Losers in a Tight Market
Hyundai-Kia emerged as a surprising victor. Combined sales hit 1.63 million vehicles, bolstered by a 53% jump in EV sales. This pushed them to fourth place in the U.S. market, ahead of struggling Stellantis and Nissan. While their EV share reached 7%, one wonders how long they can keep climbing without succumbing to the same pricing pressures affecting competitors.
Meanwhile, Stellantis unraveled, with U.S. sales plunging 15%. From its peak in 2015, the decline now stands at 42%. This isn’t just poor performance—it’s a catastrophe. Leadership chaos ensued, with CEO Carlos Tavares abruptly resigning amid dealer unrest.
General Motors, Toyota, and Ford posted moderate gains but still fell short of past highs. GM’s EV sales jumped 50.8%, reaching 114,400 units, yet they represent just 4.2% of the company’s total sales. Ford’s EV growth mirrored GM’s trajectory, but even with a 34.9% bump, EVs only make up 4.7% of its portfolio. Toyota, long a laggard in EVs, is scrambling to catch up. Will these companies bridge the gap, or will they continue playing second fiddle to Hyundai-Kia and Tesla?
Tesla: A Warning Sign for EVs
Tesla’s decline was perhaps the most surprising story of 2024. U.S. sales fell to an estimated 633,000 units, according to Cox Automotive, marking the end of its meteoric rise. Legacy automakers seized the opportunity, expanding their EV offerings and stealing chunks of Tesla’s market share. For Tesla, which once symbolized the future of driving, this stumble underscores the dangers of assuming brand loyalty in a fast-evolving market.
The Real Problem: Soaring Prices
Behind every automaker’s struggle lies a common culprit: the relentless climb in vehicle prices. Automakers have opted for higher margins over volume, leaving ordinary buyers squeezed out. Even as Hyundai-Kia and others innovate, the industry’s fixation on premium vehicles risks alienating the very consumers it depends on.
This isn’t just bad business—it’s bad for the economy. Cars are a necessity for many Americans, not a luxury. When automakers prioritize profit margins over affordability, they widen the gap between aspiration and reality. Lower prices, not fewer competitors, are the key to revitalizing the market.
The U.S. auto market needs more competition, not less. Honda’s potential takeover of Nissan could further consolidate power, reducing options for consumers. Antitrust regulators must ensure that deals like this don’t exacerbate the affordability crisis.
Looking Ahead
As EV adoption grows, automakers must navigate the delicate balance of innovation and accessibility. Hyundai-Kia’s record-setting year offers a template, but even they face limits if prices continue to climb. Without a serious course correction, the auto industry risks stagnation—and consumers will pay the ultimate price.
For the full original report, visit Wolf Street.
IMAGES: AutomotiveWoman
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