As Consumers Abandon Cars, GM Abandons Plug-In Hybrids

Following in Ford and FCA’s footsteps, GM is abandoning a large portion of its passenger car business. The news came as the company laid out plans to shut five plants in North America, shedding some 14,000 jobs in the process. Like Ford, GM rationalized the move in part due to consumer interests trending away from cars and toward crossovers. 

The trend traces back to the oil price crash of 2014. Before 2014, annual segment sales in North America were climbing at around 2%-4% (mostly recovering from the 2008 recession), but since then they have declined considerably—2018 sales are likely 25% lower than 2014.

Segment Sales Drop in 2018

Ford and GM segment sales have taken deeper cuts than the average; 2018 for both is likely more than 35% lower than 2014. The last of the big three, FCA, has seen car sales drop over 50%—makes one wonder how long till FCA announces its North American business will be consolidating to just SUVs and trucks, i.e., Jeep and Ram.

European automakers Daimler, BMW, JLR, and Volkswagen have fared better but still not well—2018 passenger car sales for them are likely down 25%-30% from 2014. Meanwhile, major Japanese and Korean automakers are slightly better with sales down only 11%-25%. The only automakers whose car sales have grown since 2014 are Subaru (7%) and Tesla (700%).

Market Conditions Unlikely to Improve Significantly

Of the possible powertrain configurations, hybrid cars have done the worst—down over 40% from 2014. Conventional vehicles are next, down 27%. The only thing growing in this segment are plug-ins with plug-in hybrids up nearly 100%, and battery electrics up over 200%.

It is thus not too surprising that those automakers selling plug-ins have done the best in this difficult environment. Subaru is an outlier, but that can be explained on the basis that its passenger cars are perceived in high regard for crossover-like capabilities such as all-wheel drive. Contrarily, GM has been at the forefront of plug-ins with the Volt, Bolt, CT6, and formerly, the ELR. Notably, at the end of GM’s cuts, only the Bolt will survive.

Given the direction of the market, GM’s decision to cut away its plug-in hybrids along with the rest may seem surprising, but it is logical. Despite compelling technological capabilities, the company’s plug-in hybrid options have never fared that well in the market relative to expectations. Going forward, it is unlikely that market conditions for plug-in hybrid passenger cars in economy brands will improve significantly. What is left of this declining segment is going to go fully electric in the not-too-distant future.