Gasoline vehicle resale values weakening as NEVs gain popularity

Gasoline vehicles are losing their advantage in resale value in China, as price competition and rapid technological change reshape the country's automotive market.

The average three-year retention rate of gasoline vehicles fell to 46.07 percent in the first half of 2026. Meanwhile, the figure for NEVs stood at 44.8 percent, according to a report released by the China Automobile Dealers Association and vehicle valuation platform Jingzhengu.

The scenario was a different story just a few years ago. In 2023, gasoline vehicles' three-year residual value averaged 62 percent, 20 percentage points higher than NEVs'.

Data from used-car platform Guazi show a similar trend. In September, the three-year retention rate for fuel-powered vehicles on the platform was 51.1 percent, down 0.4 percentage points from August, while the rate for NEVs rose 0.5 percentage points to 48 percent.

NEVs aged one to two years even recorded higher retention rates than their fuel-powered counterparts, according to the platform's monthly report.

Gasoline vehicles, particularly established foreign brands, have traditionally commanded stronger resale values, supported by service networks and relatively predictable product cycles.

But the latest figures suggest that gasoline cars can no longer be assumed to hold their value better simply because of their powertrain. One major pressure on gasoline cars' residual values is the changing price environment in the new-car market.

As automakers cut new car prices to defend sales, the value of comparable used vehicles comes under pressure. Buyers can compare used models against discounted new vehicles, forcing dealers to adjust their valuations to remain competitive.

The pressure is particularly significant for volume brands including Toyota and Volkswagen, which are facing intensifying competition from domestic brands and NEVs. Even vehicles that once enjoyed strong resale premiums can lose value when new-car discounts widen or their product competitiveness weakens, according to the reports.

Rapid changes in the NEV market have dragged down the residual value of gasoline cars. Improvements in battery technology, driving range, intelligent cockpits and driver-assistance systems can make older models less attractive, while new-car price adjustments can quickly change buyers' expectations of what a used vehicle should cost.

The shift is also evident in the comparison between Chinese brands and overseas automakers. Guazi's September data showed that mainstream overseas brands had an average three-year retention rate of 50.8 percent, down 1 percentage point month-on-month, while Chinese brands reached 50.1 percent, up 0.2 percentage points. The gap narrowed to 0.7 percentage points in September from 1.8 percentage points in August, said Guazi.

The figures challenge the longstanding assumption in China's auto market that overseas brands, particularly established ones, are inherently more valuable in the second-hand market.

For consumers planning to replace their vehicles after two or three years, the choice may therefore depend more on the specific model and its expected resale value.

Some established gasoline models continue to demonstrate strong resale performance, according to Guazi. Honda's Vezel and Mazda's CX-5, for example, remained among the leading fuel-powered SUVs in Guazi's three-year retention rankings for September, with rates of 78.8 percent and 74 percent, respectively.

Chinese carmakers saw five gasoline models make it into the three-year retention rankings, with the Wuling Hongguang V MPV seizing fourth position at 69.7 percent.

Chinese brands' advantage is particularly evident in the NEV segment. They took all the top 10 positions in Guazi's September ranking of NEVs by one-year retention rate.

The Li Auto i6 SUV led with 90.8 percent, followed by the Arcfox T1 SUV at 89.2 percent, the Xiaomi YU7 SUV at 87 percent, the MG4 EV hatchback at 85.4 percent and the Li Auto i8 SUV at 84.8 percent.

Cui Dongshu, secretary-general of the China Passenger Car Association, said the narrowing gap in resale values reflects a shift in how vehicles are valued, with factors such as pricing stability, product competitiveness and after-sales support becoming increasingly important regardless of powertrain type.

Vehicles from either segment can retain their value when brands maintain stable pricing and offer competitive products and comprehensive service networks, while frequent price cuts and weaker product competitiveness can erode the resale value of even traditionally high-retention models, Cui said.