Are Fuel-Powered Vehicles Past Their Prime?

"Filling up my tank now costs nearly 100 yuan more than it did at the beginning of the year," admits Mr. Zhang, a fuel-powered vehicle owner. He notes that the significant increase in operating costs has further highlighted the cost-effectiveness of new energy vehicle models.

Since 2026, international oil prices have generally soared, with crude oil prices climbing by over 50% within the year. Consequently, domestic refined oil prices have also risen. Compared to the start of the year, the per-liter prices of 92# and 95# gasoline have increased by approximately 1.7 yuan and 1.8 yuan, respectively. Filling up a regular household vehicle's tank now costs nearly 100 yuan more. The continuously escalating fuel expenses are influencing consumers' vehicle purchase decisions.

Compounded by cost pressures and industrial evolution and transformation, the fuel-powered vehicle market is accelerating its decline. Data reveals that in April 2026, the retail penetration rate of new energy passenger vehicles exceeded 60% for the first time, reaching 61.4%. This means that over six out of every ten vehicles sold were new energy models. In contrast, retail sales of fuel-powered vehicles stood at only 530,000 units, marking a significant year-on-year decline of 37% and a month-on-month drop of 33%, dragging down the overall automotive market.

The trend of robust sales for new energy vehicle models is expected to persist. On May 22, the China Passenger Car Association (CPCA) released an article stating, "Based on preliminary estimates from terminal performance, the retail market size for narrowly defined passenger vehicles in May is expected to be around 1.52 million units, a 9.9% increase month-on-month. Among them, new energy retail sales are projected to be around 950,000 units, a 12.0% increase month-on-month, with a penetration rate of approximately 62.5%."

Meanwhile, among the top ten models in retail sales in April, only the Geely BinYue, a fuel-powered vehicle, clung to the eighth position, with the other nine spots dominated by new energy models. Looking back to the beginning of the year, fuel-powered vehicles still occupied seven spots in the top ten sales in January, fell to six in February, and further decreased to five in March. In just four months, fuel-powered vehicles have rapidly shifted from the market mainstream to the fringes, with the former dominant players now becoming a minority.

Are Fuel-Powered Vehicles Really Being Abandoned by the Times?

From Market Dominance to a Lone Survivor on the List

Fuel-powered vehicle models, once stable fixtures on sales lists and commanding over half of the market, are now witnessing a continuous decline in their industry share, with a significantly reduced presence on mainstream lists.

CPCA data shows that in April 2026, among the top ten spots in passenger vehicle retail sales, only the Geely BinYue, a fuel-powered vehicle, tenaciously held its ground.

The sales performance of the models on the list are as follows: Geely XingYuan with 34,727 units, Xiaomi SU7 with 26,826 units, Tesla Model Y with 22,990 units, Li Auto i6 with 21,024 units, Changan Qiyuan Q05 with 15,814 units, Haishi 06EV with 15,659 units, BYD Yuan UP with 15,658 units, Geely BinYue with 14,923 units, Leapmotor A10 with 14,372 units, and BYD Dolphin with 14,218 units. The sales of the Geely XingYuan, which topped the list, were 2.3 times that of the eighth-placed fuel-powered model, the Geely BinYue. The Geely BinYue only slightly outperformed the ninth-placed Leapmotor A10 and the tenth-placed BYD Dolphin, teetering on the brink of dropping out of the top ten.

Notably, even in the top twenty list, only four fuel-powered vehicles remain, including once-popular "joint venture superstars" like the Volkswagen Lavida and Toyota RAV4, which have now fallen outside the top eighteen, with mainstream fuel-powered models fully retreating to the edge of the market.

Nowadays, the promotional effect of price concessions on fuel-powered vehicle sales is increasingly diminishing. The latest data disclosed by Cui Dongshu, Secretary-General of the CPCA, shows that in April 2026, the average price of new fuel-powered vehicle models undergoing price reductions was 131,000 yuan, with an average price reduction of 23,000 yuan, representing a 17.2% reduction. From January to April of this year, the average price of new fuel-powered vehicle models undergoing price reductions was 236,000 yuan, with an average price reduction of 34,000 yuan, a 14.6% reduction. However, sales did not increase.

CPCA data shows that in 2025, sales of narrowly defined fuel-powered passenger vehicles were 14.22 million units, a 5% year-on-year decline. In the first four months of this year, sales of narrowly defined fuel-powered passenger vehicles were 4.02 million units, a 10% year-on-year decline. Cui Dongshu predicts that with oil price fluctuations, the fuel-powered vehicle market will remain weak in 2026.

Behind the dramatic changes in the sales list lies a significant divergence among traditional automakers. German and Japanese joint venture brands, which once dominated the sales list, have completely disappeared from the top ten, with once-popular "national family sedans" like the Lavida and Corolla losing their luster. In the past, joint venture brands relied on fuel technology barriers, brand appeal, and offline channel advantages to remain at the forefront of the industry. However, faced with the wave of electrification transformation, they have lagged in market assessment and been slow to respond strategically. Now, with domestic brands continuously lowering prices and iterating core technologies for new energy models, joint venture fuel-powered vehicles lack cost competitiveness, fall short in intelligent driving experiences compared to market mainstream offerings, and see their brand value continue to shrink, with their original market share being continuously eroded.

Domestic brands have seized the opportunity of industry transformation to become a driving force in reshaping the market landscape. Geely has adopted a dual-track strategy, with its new energy flagship model, the XingYuan, topping the sales list while retaining fuel-powered models like the BinYue to meet basic transportation needs in lower-tier markets. BYD has completely ceased production of fuel-powered models and is steadily developing through pure electric and plug-in hybrid routes. Changan Automobile is focusing on its Qiyuan new energy series, gaining both market sales and user reputation.

Meanwhile, the strong rise of new energy automakers is reshaping the industry's competitive rules. The Xiaomi SU7 immediately entered the sales list at second place, becoming a new dark horse. The Tesla Model Y remains in the top three, continuing to lead the high-end pure electric market with its technological accumulation and scale effects. Brands like Li Auto and Leapmotor focus on niche segments and have successfully entered the top ten with differentiated product positioning. New energy automakers have broken away from traditional automakers' production and sales logic, continuously innovating in areas such as intelligent cockpits, autonomous driving, and battery technology, forcing traditional automakers to accelerate their transformation.

Dealers' Struggle for Survival

The precipitous decline in fuel-powered vehicle sales has made the survival situation increasingly difficult for traditional dealers. In particular, 4S stores primarily selling fuel-powered vehicles are facing multiple crises, including high inventory levels, price inversions, and shrinking after-sales services.

According to a survey released by the China Automobile Dealers Association (CADA), the comprehensive inventory coefficient for dealers reached as high as 1.89 in April, a 7.4% increase month-on-month and a 34.0% increase year-on-year, far exceeding the warning line of 1.5. Among them, the inventory coefficient for joint venture brands soared to 2.24, with a massive amount of fuel-powered vehicles accumulating and occupying substantial funds. High inventory levels have directly triggered a vicious cycle of "price inversions," with 81.9% of dealers selling at prices below their purchase prices in 2025, and more than half experiencing inversions exceeding 15%.

Meanwhile, profitability data is also not optimistic. Data shows that the proportion of profitable dealers decreased from 39.3% in 2024 to 23.5% in 2025, with the proportion of loss-making dealers reaching as high as 55.7%. In the profit structure of traditional fuel-powered vehicle 4S stores, after-sales gross profit accounts for over 40%, relying on engine and transmission maintenance. However, new energy vehicles have a simpler structure, leading to a significant shrinkage in after-sales demand and a precipitous decline in maintenance revenue.

Taking Zhongsheng Group as an example, its 2025 financial report shows that despite achieving annual new vehicle sales of 497,000 units, a 2.5% year-on-year increase, the widespread phenomenon of new vehicle purchase prices from traditional brands being lower than actual selling prices, coupled with concentrated and delayed subsidies from OEMs that were insufficient to cover dealers' purchase-sales differentials, resulted in persistent negative gross profit per vehicle for the company.

Faced with survival pressures, dealer groups are also exploring diversified transformation paths. Some leading dealer groups have chosen an "oil-electric fusion" approach, such as Runhua Group, which represents 24 fuel brands and 9 new energy brands simultaneously, using the fuel vehicle after-sales network to support new energy business. Some dealers have decisively cut weak fuel brands and fully transitioned to authorized new energy dealers. Others have reduced the scale of their offline stores, closing inefficient outlets and shifting towards lightweight operations or new retail models that integrate online and offline channels.

Regional differences have become an important variable in dealers' transformation. In first-tier cities, where new energy penetration exceeds 70%, traditional 4S stores have no room for survival, and dealers must fully transition, establishing showrooms in core business districts and improving charging service systems. In fifth-tier cities and lower-tier markets, where fuel-powered vehicles still dominate the top ten sales in the first quarter, consumers are price-sensitive, and charging infrastructure is incomplete, fuel-powered vehicles still have a short-term survival space. Dealers' core demands in these areas are to stabilize inventory and control costs.

Behind the "nine electric, one fuel" pattern in April's passenger vehicle sales list lies the continuously accelerating divergence and competition among automakers, forcing terminal dealers to embark on a life-or-death transformation. China's automotive industry is undergoing profound changes. Breaking away from fixed development paths and exploring new survival models for channels have become urgent issues for traditional industry players to address. The trend of fuel-powered vehicles retreating and electric vehicles advancing is irreversible, and a new era of automotive industry development is accelerating.