Fuel Vehicle Price Cuts Intensify: Average Discount Hits 34,000 Yuan in Jan-Apr, Yet Sales Decline Persists

Since the start of this year, the wave of price cuts in China's fuel vehicle market has intensified, with terminal discount efforts for luxury, joint-venture, and domestic models continuing to escalate. Phenomena such as price inversion (selling below cost) and loss-making inventory clearance have emerged at stores across many regions. However, this "volume-for-price" strategy has failed to reverse the downward trend in sales, instead highlighting the deep-seated predicament of the fuel vehicle market amid the substitution effect of new energy vehicles (NEVs).

A field survey by reporters found that current terminal promotion efforts for fuel vehicles have reached a new high in recent years. Stores have sufficient on-hand inventory, and merchants are accelerating inventory clearance through methods such as low-price volume sales and enhanced benefit packages. "A model that cost 170,000 yuan to take delivery of a few years ago now only sells for 90,000 yuan as a bare car," revealed a salesperson from a joint-venture brand. While circulating online claims such as "Lavida available for 56,000 yuan delivered" are exaggerated, the terminal discount intensity is indeed unprecedented, with actual price cuts for some models reaching 15%-20%. Data disclosed by Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA) Travel Federation, shows that in April 2026, the average price of discounted new conventional fuel vehicles in China was 131,000 yuan, with an average single-vehicle discount of 23,000 yuan, representing an overall decrease of 17.2%. From January to April, the cumulative average single-vehicle discount reached 34,000 yuan, a decline of 14.6%, with both the scale and magnitude of price cuts hitting record highs for the same period in recent years.

Nevertheless, sustained price cuts have failed to boost sales recovery. Data indicates that retail sales of domestic fuel vehicles in April 2026 were approximately 530,000 units, a year-on-year decrease of 37% and a month-on-month drop of 33%. Cumulative sales from January to April stood at around 4.02 million units, down 10% year-on-year. In stark contrast to the sluggish performance of fuel vehicles is the strong showing of NEVs: the retail penetration rate of new energy passenger vehicles in April reached 61.4%, with sales of approximately 849,000 units—far exceeding the sales volume of fuel vehicles. Among the top 10 best-selling models in April as counted by Dongchedi (a major Chinese auto platform), only the Geely Binyue remained a fuel vehicle, while the other nine positions were dominated by NEV models.

Industry analysts believe that the collective price cuts of fuel vehicles are not a short-term marketing tactic but an inevitable result of multiple overlapping factors. Firstly, the NEV substitution effect has intensified. With the maturity of NEV technology, improvement of charging infrastructure, and the extension of policies such as purchase tax exemptions, consumer preferences have continued to shift toward new energy vehicles. Secondly, international oil prices have risen sharply since 2026, and domestic refined oil prices have increased correspondingly, significantly raising the cost of owning and operating fuel vehicles and further suppressing consumer willingness. Additionally, channel inventory pressure remains severe. Data from the China Automobile Dealers Association (CADA) in May shows that the auto dealer inventory coefficient reached 1.89 in April, far exceeding the industry warning line of 1.5. Among them, the inventory coefficient for joint-venture brands soared to 2.24, while that for luxury and imported brands stood at 1.99. Inventory clearance pressure has forced dealers to increase profit margins.

Cui Dongshu predicts that affected by factors such as oil price fluctuations and market substitution, the overall market trend of fuel vehicles will remain weak in 2026. The industry generally holds that this wave of price cuts is essentially a "structural adjustment" of the fuel vehicle market amid the transition to new energy. It is expected that the market share of fuel vehicles may further shrink in the future, and enterprises need to accelerate technological upgrading or transition to the new energy sector to adapt to market changes.