2026 Hyundai Palisade Hybrid review: Australian first drive

Hyundai has done away with diesel for the all-new second-generation Palisade, which ushers in a slick petrol-electric hybrid powerplant, confident styling inside and out, and a degree of road presence that’s usually the preserve of far more expensive SUVs.

Shopping for a three-row SUV can potentially be a dispiriting experience. The transition from lowest-common-denominator family boxes to aspirational models that offer you plenty of badge equity, but come up short in third-row practicality, is surprisingly steep in the current marketplace.

Hyundai currently offers two SUV product strands. Go for an EV and you can step up through Inster, Kona Electric, new Elexio, Ioniq 5 and Ioniq 9, whereas if you prefer an internal combustion engine, you ascend through Venue, Kona, Tucson and Santa Fe before arriving at the flagship of that familial line, the Palisade, priced here at $89,900 plus on-roads.

The previous Palisade was a broadly accomplished thing, but both its petrol and diesel engines were beginning to look a little out of step with the requirements of Australia’s New Vehicle Efficiency Standard.

The ideal would be to introduce a powertrain that delivers all of the torque and more of the diesel while serving up the punch and liveliness of the old petrol engine, with fuel economy better than both.

It sounds a tall order, but the 2.5-litre hybrid four-cylinder engine in the latest Palisade answers that particular call.

It’s a technically intriguing vehicle, with a pair of electric motors sandwiched between the engine and the six-speed dual-clutch automatic transmission. In effect, one motor is primarily concerned with battery regeneration, while the other is chiefly used to propel the vehicle.

There’s a clutch pack between the two that allows for all sorts of combinations of drive. So the Palisade can briefly operate in full EV mode and in a couple of hybrid modes. It can even regenerate electricity both from deceleration and from the engine itself. It’s fiendishly clever.

It all plays into one of Hyundai’s key aspirations for this Palisade, which was to increase refinement. That’s aided by tyres with internal sound deadening, thicker interior carpeting, added soundproofing of the engine bay and acoustic laminated glass. 

Playing in a segment that’s already around $10K above the outgoing model means the Palisade Calligraphy needs to flex its sophistication and quality, and first impressions are promising.

The cabin is inspired by high-end furniture design, and it’s one of the few three-row SUVs where adults can sit in reasonable comfort in the third row. Nominally an eight-seater in standard trim, for a premium of $1000 buyers can switch out the middle-row bench for a pair of luxurious ‘captain’s chairs’, one of the few options available for this extravagantly well-stuffed Palisade.

The only other options available are a different colourway for the cabin, priced at $295, or premium paint, which costs $750.

The standard interior colour scheme is Black Pure, with Brown Pure, Dark Navy/Light Grey and Dark Charcoal/Brown Stitch available as cost options.

The only no-cost exterior paint finish is Creamy White Pearl, with the premium paints comprising Abyss Black Pearl, Shimmering Silver Metallic, Ecotronic Grey Pearl, Cast Iron Brown Pearl, Galaxy Maroon Pearl, Classy Blue Pearl and Robust Emerald Pearl.

The twist-action gear selector is the new home for the engine start button, freeing up centre console space. You can even enable biometric fingerprint recognition for engine start-up.

Hyundai plans to introduce the clever Digital Key 2 system shortly, which, in theory, allows you to use your phone as the key and share it with up to 15 other compatible devices. At launch, Digital Key 2 will not be initially available, but will be activated as an over-the-air update or when the vehicle is first serviced.

Yes, the UV-C device steriliser – a favourite among Hyundai customers – is fitted as standard, as is a wireless phone charger and a digital rear-view mirror with a wash system for the rear-facing camera. The stereo switches from a 12-speaker Harman Kardon installation in the old Palisade to a 14-speaker Bose setup. 

Oddments space is good, with a decently sized centre cubby, a low level tray, a modest glove box, a pen tray above it, and plenty of cupholders and bottle storage. There’s also a large drawer on the back of the centre console for second-row passengers.

The front seats deserve special mention. Hyundai’s ‘Ergo Motion’ massaging function is fitted as standard. This function allows for timed movement of the lumbar and pelvic areas, periodically moving those areas on longer drives. 

Some real thought has gone into how the two rear seating rows are both packaged and equipped. Whether you choose the three-seat bench or the captain’s chairs, both slide and tilt forward to allow reasonable access to the rear. The rear bench also slides and offers a recline function. 

Both the second and third-row outboard seats are heated, and also feature ISOFIX child-seat mountings. There are also two 100W USB-C outlets for each row, and the Palisade’s tri-zone climate control packages a roof-mounted control panel to fine-tune the temperature in the back.

Foot space is good in the second row, and a bit tighter in the third, but there’s stacks of head room and even taller adults can get comfortable in the rear, especially so if the luggage bay’s not so rammed that they can use the recline function.

Talking of the luggage bay, that’s bigger than the old Palisade too. Hyundai has cleverly slung a full-size spare underneath the vehicle, which frees up space in the back without compromising on your mobility in an emergency. 

The second and third rows of seats can not only be folded remotely from the luggage bay, but the third row can be motored forwards as well. That’s handy if you have kids in the back and still need to carry a bunch of their gear – a not infrequent occurrence as many parents will appreciate.

Whether you choose the seven or eight-seat configuration, all seats fold flat to give up to 2081 litres of available space with both rows folded. With all seats in place, you have 300L of luggage space at your disposal, and 712L with the third row folded. There’s also a small underfloor cubby that is handy if you want to keep items out of view.

The Palisade also features a vehicle-to-load (V2L) capability. This enables you to power laptops or camping equipment (with a maximum 3.6kW draw) from the vehicle. By using the Stay Mode, the Palisade will happily power electrical appliances with the engine keyed off.

What’s more, it’s possible to instruct the vehicle to fully charge the hybrid battery ahead of arriving at a pre-programmed point, so you know that when you enter Stay Mode, you will always have the hybrid battery topped up to 100 per cent for your convenience.

This 2.5-litre hybrid installation is notably more refined than the 1.6-litre setup in the smaller Santa Fe. It’s not one of those hybrids where you genuinely can’t tell if the internal combustion engine is running, but it’s pleasantly hushed.

The centre screen can be configured to show the energy flow, which helps clue you in to what the hybrid system is doing. 

At some points it’s in full EV driving mode, with the engine off and drive power coming from the 1.65kWh battery, switching to regenerative braking mode when it sends power to the battery.

There’s a full hybrid mode, where the engine and both electric motors are sending power to the wheels. There’s also a series-hybrid mode, where the engine is charging the battery, with the clutch pack between the two e-motors opened.

It sounds complicated, but in practice the net effect is one of refinement and a decent surge of torque on demand. It’s an impressive powertrain, and it works well with the six-speed dual-clutch automatic transmission. 

Power is rated at 245kW, which is a significant uptick on the 217kW Palisade eked out of the old 3.8-litre petrol V6 engine. With 460Nm on tap, this hybrid 2.5 is more muscular than both the outgoing 3.8-litre petrol, which developed 355Nm, or the alternative 440Nm 2.2-litre turbo-diesel. 

The Palisade’s ride and handling are interesting. Body control is uncannily good, with front to rear pitching cancelled out by e-Comfort Drive. When the vehicle detects front-end dive or rear-end square, it uses counter-torque from the e-motors to momentarily counteract that motion. 

Because it’s such a big SUV, the Palisade’s wheels and tyres have been scaled up accordingly, and, as a result, it rides on huge 21-inch alloy wheels.

Controlling the motion of these big wheels is a big ask, and there are occasions where surface imperfections can cause some bump and thump to enter the cabin. It’s never nervous or jittery, but nor is it quite the magic carpet ride that some air-sprung SUVs deliver.

That’s also due in part to the fact that the Palisade rides on normal passive dampers. There are no trick adaptive units or air springs here. That said, the rear dampers do have a mechanical self-levelling function. Load the boot up with heavy gear, and you can watch the back end ratchet itself up from a sagging position to a level one in a few seconds. 

A local tuning program was undertaken for this model, with a number of suspension components, including springs and anti-roll bars, developed for Aussie conditions.

Don’t let the fact that the Palisade is fitted with a hill descent control function and Pirelli Scorpion Mud and Snow tyres lull you into thinking that it’s got much in the way of off-road chops. Its ride height of 187mm is less than that of a Toyota RAV4. Couple that with a near three-metre wheelbase and you’ll need to be a bit careful when heading off sealed roads.

If traction is limited, the terrain mode settings shuttle through Snow, Mud and Sand presets to help sniff out some grip. Otherwise, the on-road drive modes are Eco, Sport and a customisable MyDrive setting.

Partly because it is fitted with a big mud and snow tyre, the steering isn’t the sharpest, but it’s accurate and fairly relaxed. Torque vectoring boosts agility, but this is still a 2.3-tonne vehicle, so enthusiastic driving is likely to saddle you with a chunky tyre bill. Replacing the 265/45 R21 Pirellis will cost almost $500 per corner.

The brake pedal can feel a little odd. The transition from electric motor re-gen braking to friction braking isn’t particularly linear, giving the pedal the feel of going from somewhat soft and underserved to sharply ramping up stopping power. Metering the exact amount of brake pedal travel takes a little getting used to, especially in stop-start traffic.

One thing you will have to bear in mind is that the maximum braked towing rating is a mere 2000kg. If you’re migrating from one of the old Palisades, that’s something to consider as the previous generation, whether diesel or petrol, carried a 2200kg braked towing rating.

Fuel consumption is rated at 6.8 litres per 100 kilometres on the combined cycle. We tested the vehicle on open roads, which don’t always get the best from a hybrid, but still saw a reasonable fuel economy figure of 8.2L/100km.

The drag coefficient of this Palisade has been improved from the old car’s 0.33Cd to 0.31. An active air flap in the front grille also closes when cooling is not required, reducing drag by 8 per cent in the process.

Couple that with a 72-litre fuel tank and it means you have an effective touring range of around 900km. An additional bonus is that the Palisade is quite happy to run on 91RON fuel, which should save you a few dollars at the bowser.

Service intervals are every 12 months/10,000km. The 12-month/10,000km service is priced at $397, and after that you’ll pay $657 for the 24-month/20,000km, $475 for the 36-month/30,000km, $674 for the 48-month/40,000km and $397 for the 60-month/50,000km service.

As part of the Hyundai Genuine Service Plan, customers can not only predict servicing charges, but also receive lifetime roadside assist and free satellite navigation updates.

The warranty is a seven-year/unlimited-kilometre deal, with an eight-year/160,000km arrangement covering the hybrid battery pack.

It ought to be noted that the seven-year warranty is conditional based on the vehicle being serviced with an authorised Hyundai dealer, otherwise it reverts to the prior five-year duration.

Hyundai had previously issued a few low-level grumbles about the process of gaining an ANCAP five-star rating, but the company is confident that the Palisade will achieve the full complement of ANCAP stars when testing takes place.

The Palisade is supplied with a suite of eight airbags and the comprehensive SmartSense system. This comprises functions such as navigation-based cruise control, lane-following assist, Highway Driving Assist, driver monitoring and intelligent speed limit assist.

Crosswind Stability Control is an intriguing debut on the Palisade. This engages at high speed and gently tweaks the brakes and the steering torque to counteract the effects of strong crosswinds, helping to reduce fatigue on longer trips.

One notable new feature is Safe Exit Assist. This activates when the electronic child safety lock is engaged and it detects an approaching vehicle from the rear. Under these conditions, the rear doors will not open, helping to prevent kids opening the rear doors into traffic.

Hyundai has listened to customer feedback regarding the intrusiveness of its ADAS functions, and has worked at ways of more easily muting warning chimes or permanently switching them off in the case of functions like speed limit change.

The Hyundai Palisade Hybrid is a very good large SUV. Even carrying that $89,900 asking price, it offers a lot of vehicle for the money, wants for almost nothing in terms of standard equipment, and feels both plush and well built.

It commands a $13,000 premium over an equivalent Santa Fe, an SUV we rate very highly, but it offers considerably more space in the rear, a more powerful and refined drivetrain, and even more in the way of equipment. Couched in those terms, it’s a relative bargain.

There aren’t too many SUVs under $100K that are genuinely big enough to accommodate adults in the third row, and passenger accommodation is where this Palisade really excels.

You could make a case for the Kia EV9 or, if you’re on a far tighter budget, the MG QS. Otherwise, you’re looking at people movers like the Kia Carnival or the Volkswagen ID. Buzz. 

Matching the Palisade Hybrid’s combination of space, depth of engineering, value, convenience, efficiency and impression of luxury is where rivals could well become unstuck. It’s a compelling package.