The Resurgence of Gasoline Vehicles: Short-Term Effect or Strategic Comeback?

Revival of Fuel Vehicles: Short-term Effect or a Turnaround?

According to the latest data from the China Automobile Industry Association (CAAM), traditional fuel passenger car sales in China reached 902,000 units in August, marking a remarkable 13.5% year-on-year increase. This surge is not just a random monthly fluctuation; it represents the third consecutive month of growth in the fuel vehicle market. Meanwhile, Porsche has adjusted its product structure, delaying the launch of some electric vehicles while introducing more fuel models. These seemingly unrelated developments reflect the determination of many automakers to make a comeback in the fuel vehicle sector, and the increase in sales signifies a significant achievement in their persistent efforts. However, the long-term implications of this recovery remain uncertain—whether it is merely a short-term effect or a genuine turnaround is still up for debate.

Fuel Vehicle Sales Decline Slows: Joint Venture Differentiation and Independent Brands Rise

The signs of a “warming” trend in fuel vehicles can be traced back over time. Data shows that in 2024, domestic sales of traditional fuel vehicles were 13.98 million units, representing a 17.3% decline year-on-year. However, from January to August of this year, sales totaled 8.747 million units, reflecting only a 0.3% decrease compared to the same period last year. At the recent 2025 TEDA Automotive Forum, Wang Qing, Deputy Director of the Market Economy Research Institute of the State Council Development Research Center, noted a positive change for fuel vehicles this year, as their negative contribution to overall growth has significantly decreased. In 2024, this negative contribution reached above -700%, but from January to July this year, it improved to -9.5%, indicating a phase of recovery in the fuel vehicle market.

Within this recovery wave, a clear market dichotomy has emerged: the differentiation of joint ventures and the rise of independent brands. The internal differentiation among joint ventures has become a notable market characteristic. SAIC Volkswagen and SAIC General Motors continue to lead growth. In the first half of the year, SAIC Volkswagen’s cumulative sales exceeded 959,000 units, with a year-on-year increase of 2.3%—the Lavida and Passat models both surpassed 100,000 units in sales. FAW-Volkswagen sold 436,000 units, an increase of 3.5%, with the Jetta selling over 110,000 units in the first half and the Magotan family experiencing a staggering 23.8% year-on-year sales growth. SAIC General Motors recorded sales of 245,100 units, marking an impressive 8.64% increase, with the Buick GL8 remaining among the top three in MPV sales.

Japanese brands, however, show a polarized trend. GAC Toyota’s July sales reached 66,000 units, up 11.7%, while Dongfeng Nissan’s share of the domestic fuel vehicle market continues to shrink, and Honda’s growth lags behind Toyota. Independent brands have become a crucial driving force behind the market’s “warming,” breaking the previous notion that joint ventures dominated the recovery of the fuel vehicle sector. Earlier this year, many executives from independent automakers publicly stated their commitment to fuel vehicles. Great Wall Motors’ Chief Technology Officer, Wu Huixiao, emphasized that considering the global market and the existing fuel vehicle users in China, the company will continue to invest in this segment. Geely’s CEO, Gan Jiayue, also confirmed, “Geely will not abandon the fuel vehicle market, which remains an essential part of the market, accounting for over 50% of our sales.” In the first half of this year, Geely sold 684,000 fuel vehicles, with the China Star series contributing 616,000 units. In August, the Boyue L sold 24,200 units, making it the only locally produced model in the top three of fuel vehicle sales, while the Xingyue L achieved a monthly sales record of 26,600 units in February, a staggering 162.7% increase year-on-year.

Changan’s fuel vehicle foundation remains solid, with first-half sales reaching 905,000 units, twice that of new energy vehicles. Chery also performed well, selling 901,000 fuel vehicles in the first half, with the Tiggo 8 selling 15,700 units in August, and the Arrizo 8 making it to the top of the fuel sedan sales list with 23,100 units sold from January to February.

Dual Drivers of Technological Upgrades and Price Competition

On one side, new energy vehicles continue to reshape the industry landscape through technological innovations and policy benefits, while on the other, traditional fuel vehicles are mounting a comeback with consecutive sales growth. This clash between old and new forces highlights the complexity of the automotive industry’s transitional period. Ma Jianting, Chairman of Ningbo Tiantian Automobile Trading Co., believes that the resurgence of fuel vehicles is an unstoppable trend. He argues that the advantages of new energy vehicles are diminishing. Currently, there is a growing call for “equal rights for oil and electricity,” with more cities proposing to lift restrictions on road access for both fuel and electric vehicles. If cities with license plate restrictions implement “equal rights,” the advantages of new energy vehicles in terms of purchase incentives and road access will significantly diminish, impacting the market appeal of pure electric vehicles.

Moreover, consumer perceptions are shifting, reducing the previous faith in the cost advantages of pure electric vehicles. Initially, consumers chose pure electric vehicles primarily due to their lower operating costs. However, as the market has developed, the “hidden costs” of pure electric vehicles have become increasingly evident. For instance, the depreciation rate for second-hand pure electric vehicles remains high, especially as new vehicle prices are frequently and significantly reduced, causing some consumers to hesitate in their purchasing decisions. For example, a three-year-old pure electric vehicle typically retains only 30% to 40% of its original price, far below the 50% to 60% of fuel vehicles. Adding to the dilemma, the earliest batches of new energy vehicles have now surpassed eight years in age, with battery replacement costs often exceeding the residual value of second-hand vehicles. After thorough calculations, consumers find that the lifecycle cost advantage of pure electric vehicles is no longer compelling, directly affecting their buying decisions.

The resurgence of fuel vehicles is also attributed to ongoing product adjustments and optimizations by manufacturers, further enhancing their value. This year, traditional automakers have been actively upgrading fuel vehicle technology, particularly in intelligent features. The realization of “oil-electric intelligence” has addressed the shortcomings of fuel vehicles in terms of intelligence, dispelling the stereotype of fuel vehicles being “backward” and “conservative.” Currently, newly launched or soon-to-be-launched fuel vehicles show significant improvements in intelligent driving, smart cockpit, connectivity, and interactive functions, gradually bridging the technological gap with new energy models. Data from the China Automobile Circulation Association indicates that in August, the intelligent configuration rate among mainstream joint brands increased by 18 percentage points year-on-year. With the generational gap significantly narrowed, the appeal of fuel vehicles to consumers has improved. It can be said that the upgrade towards intelligence is a direct driving force behind the “warming” of fuel vehicles.

Furthermore, fuel vehicle technology continues to iterate. Compared to electric vehicles, fuel vehicles have undergone a century of development, resulting in high technological maturity, particularly in terms of collision safety and stability of power systems. Safety remains a primary concern for consumers, and this year has seen frequent scrutiny of automotive safety issues, leading to a significant boost in the perception of fuel vehicles. Additionally, traditional automakers continue to invest in research and development of fuel vehicle technologies, enhancing engine efficiency and upgrading transmissions, thereby improving the economic efficiency and reliability of fuel vehicles, enabling them to regain an advantage in market competition.

Policies are also guiding structural adjustments in the industry, still encouraging the development of fuel vehicles. Currently, new energy vehicle companies are generally facing profitability challenges, and fuel vehicles still play a significant role in supporting economic development. They not only significantly stabilize employment and stimulate domestic demand but also remain a crucial part of the national economic cycle. The maturity and universality of the fuel vehicle industry allow it to continue playing an irreplaceable role in ensuring people’s livelihoods and enhancing travel convenience, which is vital for maintaining the quality of life and happiness of the populace.

“The recent stabilization of fuel vehicle market share is a sign of a more mature market. This is not a short-term ‘rebound,’ but rather a normalization of ‘stabilization’,” emphasized He Li, Director of Market and User Operations at SAIC Volkswagen’s North China Marketing Division, during an interview at the 2025 TEDA Automotive Forum. He noted that the stabilization of fuel vehicle market share reflects the maturity of the market and the rational return of consumers. Recently, J.D. Power released the 2025 China Automotive Product Appeal Index (APEAL), indicating that the overall appeal index for the fuel vehicle industry in 2025 is 751 points (on a scale of 1000), which is an increase of 14 points from 2024, marking the largest growth in five years. Yang Tao, General Manager of J.D. Power’s Automotive Product Division in China, stated that this indicates that despite the rapid penetration of new energy vehicles, traditional fuel vehicles not only retain strong competitiveness but also possess considerable potential for improvement. Notably, the appeal of independent brand products has significantly increased. Their lower fuel consumption, more attractive designs, and competitive pricing compared to similar new energy vehicles have made consumers more aware of the reasons for choosing fuel vehicles today.

However, some industry insiders hold opposing views, suggesting that the resurgence is merely a result of a price war leading to volume sales. Data indicates that from January to July this year, the average final transaction price for joint venture fuel vehicles decreased by 8.2% year-on-year. When excluding price factors, there has not been a substantial recovery in actual demand for fuel vehicles; the current sales growth resembles a short-term market share gain achieved through profit concessions by automakers, rather than a fundamental reversal in the position of the fuel vehicle market. Reports suggest that prices for fuel vehicles across various sub-segments have reached “unbelievably attractive clearance sale levels.” For example, both independent and joint brands have made significant efforts, such as Changan’s Yidong priced below 50,000 yuan and Buick’s Regal just above 100,000 yuan, making them among the lowest prices globally, therefore appealing to consumers.

Additionally, competition in the fuel vehicle sector has evolved. Jin Yongsheng, Chief Knowledge Officer at Shanghai Shuzhi Software Co., noted that joint venture companies have indeed awakened to the reality of the traditional fuel vehicle market and are now showcasing their sincerity by upgrading their models, particularly with Volkswagen, Toyota, and Nissan leading the way. The new Sagitar has been upgraded to nearly B-class dimensions, the new Corolla has been upgraded from the former Asian Lion model, the new Levin has been elevated from the previous Ling Shang, and the new Sylphy has also been upgraded to close to B-class dimensions. The once-dominant joint brands are adopting strategies reminiscent of past tactics used by independent brands and Korean and French companies in the fuel vehicle battle, where larger vehicles compete in smaller segments. Whether this strategy will prove effective remains to be seen, but it clearly indicates that joint brands recognize the instability of traditional fuel vehicle advantages and are beginning to adapt.

The Future Vehicle Market: New Energy Vehicles as the Absolute Mainstream

The sales competition between new energy vehicles and fuel vehicles is clearly outlining the trajectory of market transformation. By 2025, new energy vehicle sales are expected to surpass those of fuel vehicles for the first time, with a penetration rate exceeding 50%, yet this does not overshadow the short-term rebound achieved through price reductions and hybrid upgrades in fuel vehicles. This dynamic interplay reflects a deep integration of technology pathways and market demands. What does this dynamic equilibrium suggest about the future market landscape?

Liu Lijia, Global Partner at Swiss Horiba Group, believes that there is some disagreement in the industry regarding the development trajectory of electric vehicles. On one hand, concerns about electric vehicles’ range anxiety and battery recycling persist, and their carbon cycle, energy-saving levels, and ESG properties remain contentious; on the other hand, oil resources are not as scarce as previously thought. Although the penetration rate of new energy vehicles in China has exceeded 50%, some purchase demands may have been preemptively satisfied. The future may likely see a spiral growth pattern for electric vehicles, with both electric and fuel vehicles alternating in dominance. Former GAC Group Chairman Zeng Qinghong predicted that by 2030, the automotive market will establish a “433” structure, with 40% hybrids, 30% pure electric, and 30% fuel vehicles, while urging policies to ensure equal development opportunities for both fuel and electric vehicles.

Automotive channel expert An Yang believes that in the transitional period before disruptive technological changes arrive, a coexistence of various power forms, including fuel vehicles, plug-in hybrids, pure electric, methanol fuel, and mild hybrid technologies will be established. This diverse power landscape will persist due to policy guidance, technological maturity, and regional differences, forming a dynamic interaction where each type influences the other.

Meanwhile, Zhang Ruifeng, Secretary-General of the Guangdong-Hong Kong-Macau Greater Bay Area New Energy Vehicle Industry Technology Innovation Alliance, noted that the continuous three-month sales growth of fuel vehicles results from various factors, including significant price reductions by automakers, financial incentives, and the rise of cold-weather markets in northeastern and northwestern regions and rural areas. This should not be simplistically interpreted as either a short-term effect or a full turnaround. “In the short term, fuel vehicles will still hold a certain market share alongside new energy vehicles. However, in the long run, as new energy vehicle technology continues to advance and the market matures further, the market share of fuel vehicles may gradually decline, ultimately concentrating in specific sectors and markets,” Zhang stated. “By 2029, the market share of new energy vehicles is expected to see a notable increase, potentially exceeding or nearing 80%. In discussions with automotive industry professionals, some believe the final market share will stabilize around 60%, which I personally think may be a bit conservative,” Wang Qing commented. Zhang Ruifeng also echoed the sentiment that “mainstream means that by 2035, the proportion of new energy vehicles should exceed 80%.”

The Electrification Turning Point is Near

During the recent 2025 TEDA Automotive Forum, several industry experts emphasized that “the historical turning point at which the automotive market becomes predominantly electric is imminent.” Industry insiders pointed out that in the new balance between oil and electricity, timely policy guidance will be crucial. Wang Qing explicitly proposed that the subsidy gap between fuel and electric vehicles should be narrowed, allowing for some symbolic differences, but not too wide to ensure fair competition. He stressed that the essence of policy coordination is to control the rhythm, suggesting measures such as establishing clear old-for-new subsidy plans and staggering the withdrawal of purchase taxes and subsidies to avoid significant market fluctuations. Other industry experts also noted that policies should shift from “one-way incentives” to “mutual collaboration,” retaining support for new energy while allowing space for fuel vehicles to transition. Under a fair competitive framework, internal combustion engines are not on the brink of extinction; rather, they are carving out new pathways through hybrid technology. Professor Han Zhiyu from Tongji University provided a representative forecast: “By 2030, 60% of new vehicles in the Chinese market will still require internal combustion engines.” He further broke down this structure: pure electric vehicles will capture 40% of the market share, while plug-in hybrids, range-extended, and non-plug-in hybrid products will collectively account for 60%, with the penetration rates of range-extended and plug-in hybrids expected to exceed 40%, forming a market scale of tens of millions of units.

Technological upgrades provide a lifeline for internal combustion engines. An industry expert revealed at the 2025 TEDA Automotive Forum that by 2025, the effective thermal efficiency of internal combustion engines is expected to reach 45% to 47%, with hopes of exceeding 50% by 2030. Coupled with the application of carbon-neutral fuels like methanol and hydrogen, significant emissions reductions can be achieved. The first domestically produced hydrogen internal combustion engine generator set has already entered commercial operation, and BMW has restarted research and development of the X5 range-extended version, confirming the feasibility of the “internal combustion engine + new energy” fusion path.

As Professor Xu Xiangyang from Beihang University remarked, “In the more than 70 years of development of China’s automotive industry, this is the best time and also the most challenging time!” The turning point is approaching, but the transition will not be immediate. Driven by both policy coordination and technological innovation, the Chinese automotive market is forming a diversified landscape led by electrification, with hybrid technology serving as a transition, accelerating the process of new energy transformation while leaving space for the sustainable development of internal combustion engines.