Energy Transition

Gas stations, ubiquitous in both urban and rural settings, are undergoing a significant transformation across the industry.

According to Longzhong Information, by the end of 2025, the number of gas stations nationwide is projected to reach approximately 110,000, marking a 7.5% decline from the peak in 2021. This represents a negative compound annual growth rate over five years, signaling the end of an era characterized by large-scale expansion. The China Petroleum Economic and Technological Research Institute also highlighted in its 2025 Report on the Development of the Domestic and Foreign Oil and Gas Industry in 2024 that refined oil consumption has peaked. The rapid rise of new energy vehicles has significantly slowed the growth in oil demand, suggesting that traditional fuel demand may enter a sustained decline. This trend is prompting the gas station industry to transition towards integrated energy stations.

In fact, the pace of gas station closures is surprising compared to the steady decline in fuel consumption in recent years. Data from the China Association of Automobile Manufacturers (CAAM) indicates that domestic sales of traditional fuel-powered passenger vehicles reached 11.06 million units in 2025, a 4.3% decrease year-on-year. From January to July 2026, sales of traditional fuel-powered passenger vehicles stood at 5.364 million units, representing a 30.1% decline year-on-year, with the market penetration of new energy vehicles surpassing 60.4% for the first time in July.

Additionally, the 2025 Report on the Development of the Domestic and Foreign Oil and Gas Industry released by the China Petroleum Economic and Technological Research Institute noted that refined oil consumption decreased by approximately 3% year-on-year in 2025, with gasoline and diesel consumption declining by 2.4% and 4.4%, respectively. Industry analysts generally expect refined oil demand to continue declining in 2026, with the rate of decline potentially accelerating.

On one hand, fuel demand is shrinking, while on the other, demand for electric power replenishment is rapidly increasing, resulting in a shift in the transportation energy system from "oil" to "electricity." Major oil and gas companies have accelerated the renovation and upgrading of existing stations, moving away from relying solely on oil sales. The evolving business models at gas stations reflect the broader restructuring of China's automotive industry energy landscape.

Shrinking Fuel-Powered Vehicle Market

Sales in the fuel-powered vehicle market have continued to decline this year. Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), explained that factors such as rising oil prices, a downturn in the macroeconomy, reduced customer traffic during the high-temperature off-season, and demand depletion following a sales surge in June have all contributed to the recent significant decline in fuel-powered vehicle sales.

Therefore, despite automotive brands continuing to increase terminal discounts, reversing the overall downward trend in demand for fuel-powered vehicles remains challenging.

According to production and sales data released by the CAAM, in July 2026, China's passenger vehicle sales reached 1.345 million units, a 24.7% decline year-on-year. Among them, sales of fuel-powered passenger vehicles stood at 429,000 units, a 47.2% decline year-on-year. Notably, fuel-powered vehicles have experienced declines of around 40% for several consecutive months, while the market penetration of new energy vehicles has remained above 60% for four consecutive months.

Several sets of data clearly illustrate the evolving trend of "oil retreat, electricity advance" in China's automotive market. Among the sales rankings, fuel-powered vehicles, which once dominated the market, have now been comprehensively surpassed by new energy vehicles.

According to CPCA retail data, in July 2026, only 11 fuel-powered models sold over 10,000 units per month, a decrease of six from the 17 models in June. The Toyota Corolla Cross became the top-selling fuel-powered vehicle in July with 14,510 units sold, and it was the only fuel-powered model in the CPCA's top ten retail rankings. The continuously declining threshold for entry into the top ten has put this fuel-powered model's position on the list at risk.

Behind the continuous shrinkage of the fuel-powered vehicle market, the traditional pricing system is also being reshaped. From joint-venture family cars to luxury vehicles, the entire lineup has begun offering substantial terminal discounts, with many models experiencing price inversions and loss-making inventory clearance. Several new models have directly reduced their official guidance prices (manufacturer's suggested retail prices), with brand premiums continuously shrinking.

After several rounds of price wars in the first half of the year, the bare car prices of several Mercedes-Benz and BMW models fell below 200,000 yuan, with comprehensive discounts on several older inventory models from BMW, Benz, and Audi (BBA) once approaching 50%. The joint-venture family car market is also under pressure, with prices for "national family sedans" such as the Honda Civic, Volkswagen Sagitar, and Nissan Sylphy loosening, while terminal pricing for mainstream B-class models like the Toyota Camry, Volkswagen Passat, and Volkswagen Magotan has become more volatile.

On August 10, the Land Rover Defender 110 HSE was offered at a limited-time starting price of 728,000 yuan, a direct reduction of over 170,000 yuan from the previous model's price of 899,000 yuan. Previously, the Cadillac CT5's limited-time starting price also dropped to 199,900 yuan.

However, price reductions clearly cannot save the fuel-powered vehicle market, which is currently caught in a vicious cycle: promotions struggle to drive actual sales and instead heighten consumer wait-and-see sentiment, rendering the price lever increasingly ineffective. This represents not just a contraction in market size but a systemic restructuring of the fuel-powered vehicle pricing system.

In the long term, the growth window for the domestic fuel-powered vehicle fleet is closing, suppressing the growth potential of gasoline consumption from the source and foreshadowing a consolidation in the gas station industry.

Transformation in the Gas Station Industry

Currently, PetroChina and Sinopec, with a 48.36% share of stations, account for nearly 70% of the nation's refined oil sales while completing in-depth layouts in key locations, controlling over 70% of the resources in expressway service areas, core urban hubs, and major national highway corridors nationwide.

Private gas stations account for a high 48% of all stations, nearly matching the two state-owned giants in number. However, their station count has been shrinking at a compound annual growth rate of -3.68% over the past five years. Shandong, Henan, and Hebei provinces collectively account for 34.79% of the nation's private gas stations, representing the most fiercely competitive red ocean market in China. Despite accounting for nearly half of the station count, their sales volume is less than 30%, highlighting the heavy efficiency challenges faced by private gas stations.

For a long time, many private gas stations in suburban, county, and township areas have relied on location-based advantages to survive, generally characterized by low per-station sales, weak supporting facilities, and single-service offerings. Against the backdrop of overall shrinking fuel demand, low-efficiency stations are experiencing continued dilution of customer traffic and compression of profit margins, leading to ongoing closures and transfers.

At a press conference held by the State Council Information Office in June 2026, Vice Minister of Commerce Sheng Qiuping stated that, in line with energy transition efforts, China will promote the systematic transformation and upgrading of the nation's 110,000 gas stations, fully transitioning them into integrated energy service stations offering "oil, gas, hydrogen, electricity, and services."

The transformation of traditional gas stations into integrated energy service stations is not only an inevitable direction under energy transition but also an unavoidable process of industry consolidation.

It is understood that the renovation scope ranges from simple "oil + fast charging" basic versions to full-service stations integrating oil, electricity, hydrogen, and gas, with per-station renovation costs reaching several million to tens of millions of yuan. Charging, energy storage, and hydrogen equipment are precision-based and subject to rapid wear and tear, resulting in operational and maintenance costs far higher than those of traditional gas stations. Additionally, difficulties in achieving complementary customer flow across multiple businesses, coupled with constraints from geographical location, parking space availability, and turnover rates, offer no clear advantage over single-service oil or charging stations, making it difficult to improve profitability.

Therefore, it is crucial to advance differentiated renovations of gas stations based on local conditions and tailored strategies, an inevitable measure to avoid resource misallocation and enhance industry operational efficiency.

As the gas station industry undergoes structural reshuffling, a polarization trend has also begun to emerge, with small and medium-sized private stations bearing the brunt of this round of market consolidation.

Under the dual pressures of high renovation costs and fierce market competition, a large number of private gas stations have chosen to adopt brand franchising. By affiliating with leading domestic energy brands, they leverage the franchisor's supply chain resources, brand influence, and complete management systems to achieve asset-light transformation through franchising, thereby avoiding the substantial investment risks associated with independent renovations.

According to institutional forecasts, approximately 20,000 gas stations nationwide will close, be transferred, or undergo transformation and exit between 2025 and 2030, with the vast majority being low-efficiency private stations lacking competitiveness. Today, with the accelerated onset of the electrification wave, as the terminal carriers of the transportation energy system, the iterative transformation of the gas station industry represents not only self-restructuring of terminal business models but also the broader trend of electrification in China's automotive industry and low-carbon transition in the energy mix.

This article is original content from China News Auto. Sharing by individuals is welcome. If media outlets wish to reprint it, please credit the author and source at the beginning of the article. Any media or self-media outlets are prohibited from using any content from this article to create video or audio scripts. Violators will bear legal responsibility.