Toyota Motor Corp. and Hyundai Motor Co. are pulling closer to Detroit’s marquee automakers in the U.S. auto market, boosted by demand for gas-electric hybrids and affordable vehicles as average car payments rise well above $800 a month.

Toyota’s sales rose slightly to more than 633,000 vehicle in the third quarter, including its Lexus luxury division. That put the Japanese automaker within shouting distance of General Motors Co., long the top-selling automaker in the U.S., which sold nearly 671,000 vehicles across its four brands in the period, a 5.5% decline.

Hyundai notched another record sales tally in the third quarter, helped by a 35% jump in hybrid sales. Along with its affiliate Kia Corp. and Genesis brands, Hyundai could potentially overtake Ford Motor Co. in third-quarter sales, researcher Cox Automotive Inc. said recently. Ford is expected to report sales on Friday.

“Consumers are dealing with a lot of cost pressure,” said Randy Parker, chief executive officer of Hyundai’s North America business. “They’re trying to figure out how to stretch their dollars. Thank God we never gave up on passenger cars.”

The results highlight how soaring new-car prices and fuel costs are contributing to a shift in the competitive landscape in the world’s second largest auto market.

Carmakers including Toyota and Hyundai are growing, helped by multiple models that start at less than $30,000 and gas-electric hybrids. That has given them an advantage over their Detroit rivals, which don’t have many offerings in those in-demand categories.

Toyota’s sales electrified vehicles including hybrids rose almost 40% in September, while the Corolla compact car was up 5% as buyers look for cheap and efficient options.

The average selling price for new cars topped $50,000 in August, fueled by growing midsize SUV sales and price increases on smaller, more-affordable cars. The average monthly payment likely rose to $821 last month, a record for September, according to researcher JD Power.

The annualized rate of U.S. auto sales likely slipped 2.1% to 16.3 million vehicles in the third quarter and is on pace to finish the year slightly down from 2025, according to researcher Cox Automotive Inc. Still, the performance is better than previously expected, forecasters said, highlighting a degree of resiliency as demand for pricier vehicles helps mask the effects of inflation and high interest rates.

“Right now, it’s high-end consumers buying expensive pickup trucks,” said Sam Fiorani, vice president of global forecasting for AutoForecast Solutions. “There is growth in the higher end of the market, but we’ve lost the people making less than $100,000 a year.”

GM’s sales fell 5.5% in the third quarter with weakness coming mostly in its Cadillac brand, where sales of its electric vehicles and gasoline-powered Cadillac Escalade all fell sharply.

Sales of GM’s light-duty pickup trucks grew, helped by a 13% gain by the high-volume Chevrolet Silverado. Chevrolet offered 0% financing for five years to clear out inventory of the current version, which will be replaced by an all-new model later this year.

Hyundai said Thursday its sales set a record for September and the third quarter as its hybrid volume grew 35% in the quarter and now represents almost one-third of all the brand’s sales. The South Korean automaker also saw strong growth from its Elantra compact and Sonata mid-sized sedan, which both start for less than $30,000. Sonata sales grew 34% in the quarter.

Before the pandemic, the average new vehicle sold for less than $40,000. Automakers also offered hefty discounts and a larger number of compact vehicles priced below $25,000. That helped keep U.S. vehicle sales above 17 million a year for much of the last decade.

Market researchers expect overall U.S. auto sales to finish this year at around 16 million vehicles. That puts carmakers in the position of deciding whether to hold the line on prices to protect profit margins, or dole out more incentives to boost sales.

So far, automakers continue to avoid the steep discounts that were commonplace before the pandemic. But they are starting to budge, spending an average of nearly $3,600 per vehicle, up 7.3% from a year ago, according to JD Power. As a percentage of a vehicle’s sticker price, September incentives likely rose slightly to 6.9%.

Discounts today are rising for gasoline-powered vehicles, according to researcher Mobility Global. Those models now sell with discounts at nearly 9%, even for luxury vehicles.

“Customers are looking at the sticker price even if they are in the premium sector,” Jason Hoff, CEO of Mercedes-Benz North America, said at the Automotive News Congress in Detroit this week.

Forecasters thought the market would be in a much faster retreat given inflation and the Federal Reserve’s recent decision to raise interest rates. The fact that demand is holding up shows that the well-heeled buyers who are less sensitive to high prices are still buying.

Fiorani raised his sales forecast for the year to 16.2 million vehicles from 15.9 million. Cox similarly increased its forecast, based in part on resilient consumers who’ve become accustomed to paying more for cars and are now replacing older models.

“People still need cars,” said Cox Executive Analyst Erin Keating. “People have become fatigued with waiting for new vehicles to become more affordable.”

—With assistance from Chester Dawson.

(Updates with GM, Toyota results starting in the first paragraph.)

©2026 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.