The tides have turned—fuel vehicles are regaining momentum!

According to the latest data from the China Association of Automobile Manufacturers (CAAM), domestic sales of traditional fuel-powered passenger vehicles reached 902,000 units in August, a year-on-year increase of 13.5%. This reflects not merely a temporary fluctuation but the third consecutive month of growth in the fuel vehicle market.

The question now is whether this recovery represents a short-lived rebound amid broader market transformation or a robust revival following a period of strategic adjustment.

01 Signs of a Fuel Vehicle “Warm-Up” Have Been Evident

In fact, indications of a fuel vehicle resurgence have been visible for some time.

When examining a longer timeline, traditional fuel vehicle sales have been quietly sending positive signals. CAAM data shows that domestic sales of traditional fuel vehicles in 2024 totaled 13.989 million units, a year-on-year decline of 17.3%. However, from January to August of this year, domestic sales reached 8.747 million units, with the year-on-year decrease narrowing to just 0.3%.

Earlier this year, executives from several automakers publicly reaffirmed their commitment to fuel vehicles. Wu Huixiao, Chief Technology Officer of Great Wall Motors, stated that due to considerations for the global market and ongoing domestic demand, the company would continue to invest in the fuel vehicle sector.

Gan Jiayue, CEO of Geely Auto Group, also emphasized: “Geely will not abandon the fuel vehicle market. Fuel vehicles remain a critical component of the automotive industry, accounting for over 50% of market share. We will continue to strengthen our investments in this area.”

Ma Jianting, Chairman of Ningbo Tiantian Auto Trading Co., Ltd., believes the recovery of fuel vehicles is an inevitable trend.

On one hand, fuel vehicle technology continues to evolve. While pure electric vehicles have made significant progress in areas such as range and smart features, traditional automakers have also been enhancing fuel vehicle technology through measures such as optimizing engine efficiency and upgrading transmissions, further improving the economic and reliability aspects of fuel vehicles and ensuring they retain a competitive edge.

On the other hand, healthy industry development requires policy-guided structural adjustments. Currently, many new energy vehicle companies face profitability challenges, with most relying on subsidies and capital injections to sustain operations. The phenomenon of being “large but not strong” is widespread. In contrast, the supply and industrial chains of fuel vehicles continue to play a vital role in supporting economic development. They contribute significantly to stabilizing employment, boosting domestic demand, and facilitating the national economic cycle. Moreover, the maturity and universality of the fuel vehicle industry ensure its irreplaceable role in safeguarding public welfare, enhancing mobility, and maintaining quality of life and happiness.

02 Joint Venture Automakers Shift Strategy: Leveraging Larger Models to Compete with Smaller Ones

On one hand, new energy vehicles continue to break through in market penetration and reshape the industry landscape with technological innovations and policy support. On the other hand, traditional fuel-powered vehicles have suddenly gained momentum, staging a counterattack with consecutive sales growth and a strong rebound. The ongoing clash between these established and emerging forces remains highly unpredictable.

Jin Yongsheng, Chief Knowledge Officer of Shanghai Shuce Software Co., Ltd., suggests that a more nuanced analysis of the data is necessary:

First, the main force preventing a sharp decline in traditional fuel vehicle sales is the aggressive new model offensive from domestic brands. Many joint venture automakers have yet to reverse their downward trends.

Second, joint ventures have indeed "awakened" to market realities and begun demonstrating renewed commitment by upgrading their vehicle models. This is particularly evident with brands such as Volkswagen, Toyota, and Nissan. The new Sagitar L has been upgraded to dimensions approaching those of a B-segment car; the new Corolla now adopts the body of the previous-generation Asia Lion; the new Levin has been elevated to the platform of the previous Ling尚; and the new Sylphy has also been enlarged to nearly B-segment size. Once-dominant joint venture brands have adopted the "Tianji赛马" strategy—a historical Chinese tactic of leveraging relative advantages—previously used by domestic brands as well as Korean and French manufacturers. By "using larger models to compete with smaller ones," it remains uncertain whether this approach will yield significant results, but it at least signifies a positive shift, indicating joint venture brands recognize that their historical advantages in traditional fuel vehicles are no longer secure and are beginning to adapt proactively.

Third, recently launched fuel vehicle models and those already listed in the Ministry of Industry and Information Technology’s (MIIT) catalog awaiting market release have shown substantial improvements in areas such as autonomous driving, smart cockpits, connectivity, and interactive features. These upgrades have effectively narrowed the technological gap that once existed between fuel vehicles and new energy models. With the generational difference significantly reduced, consumer appeal has improved accordingly.

Fourth, the complete phase-out of pure internal combustion engine vehicles will be a lengthy process. The transition from pure fuel vehicles to conventional hybrids, and then from conventional hybrids to plug-in hybrids or range-extended electric vehicles, will depend not only on market trends but also on various external factors. It cannot rely solely on technological superiority but will also require supportive policies, regulations, and shifts in consumer habits.

Fifth, and most critically in Jin’s view, is that current prices of fuel vehicles across major market segments have "fallen to highly attractive, even astonishingly low clearance-sale levels." Taking A-segment and B-segment sedans as examples, both domestic and joint venture brands have exerted tremendous effort. Models such as the Changan Yidong, priced under ¥50,000, and the Buick Regal, starting at just over ¥100,000, represent "prices that are rock-bottom even by global standards—enough to win over consumers’ wallets."

03 Significant Increase in Fuel Vehicles’ Appeal Index: Can They Have the Last Laugh?

“The slowdown in the decline of fuel vehicle market share reflects a more mature market. This is not a short-term ‘rebound’ but a normalization of ‘stabilization’,” emphasized He Li, Director of Market and User Operations at SAIC Volkswagen’s North China Marketing Division, in an interview with China Automotive News during the 2025 Tianjin TEDA Auto Forum. He noted that China’s auto market is undergoing a rebalancing of its energy structure, and the stabilization of fuel vehicle market share signals both market maturation and a return to rationality among consumers.

Recently released 2025 China Automotive Performance, Execution, and Layout (APEAL) Study by consumer insights and market research firm J.D. Power shows: The overall appeal index of China’s fuel vehicle industry in 2025 reached 751 points (on a 1,000-point scale), an increase of 14 points compared to 2024—marking the largest growth seen in the past five years.

Yang Tao, General Manager of the Automotive Product Division at J.D. Power China, believes this indicates that traditional fuel vehicles not only remain highly competitive amid the rapid penetration of new energy vehicles, but also possess considerable potential for improvement. The noticeable leap in appeal of domestic brand products has been particularly outstanding. Lower fuel consumption, more attractive design, and more competitive pricing compared to new energy vehicles in the same class have given consumers a clearer understanding of “the rationale for choosing a fuel vehicle today.”

Take Ms. Pan, who recently considered changing her car, as an example. She told a China Automotive News reporter that although her family recommended switching to a new energy vehicle, she still prefers fuel models. Refueling is convenient—gas stations are widespread in both urban and rural areas, allowing her to refuel and get back on the road in just 3–5 minutes. Additionally, she believes fuel vehicles retain their value better compared to new energy vehicles, which undergo rapid updates and model replacements.

Liu Lijia, Global Partner Director at Holcim Group (Switzerland), pointed out that although the penetration rate of new energy vehicles in China has exceeded 50%, this has front-loaded some consumer demand. The future landscape will likely feature electric vehicles ascending in a spiral pattern, alternately taking the lead with fuel vehicles.

However, Zhang Ruifeng, Secretary-General of the Guangdong-Hong Kong-Macao Greater Bay Area New Energy Vehicle Industry Technology Innovation Alliance, argued that the three consecutive months of sales growth for fuel vehicles are the result of multiple factors—including significant price reductions by automakers, promotional strategies such as financial incentives, and rising demand in colder regions and rural markets in eastern, western, and northern China. It should not be simplistically interpreted as either a short-lived rebound or a strong recovery.

“In the short term, fuel vehicles will continue to hold a certain market share, coexisting with new energy vehicles. But in the long run, as new energy vehicle technology continues to advance and the market further matures, the market share of fuel vehicles may gradually diminish, potentially becoming concentrated only in specific segments and regions,” Zhang said.

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