Domestic Fuel Prices Drop for Second Straight Time, Re-entering the ¥7 Era in Some Regions—Yet Falling Gas Car Sales Aren't Mainly Due to Oil Prices

Domestic refined oil prices have recently seen their first consecutive double decline of the year. Starting June 19, retail prices for gasoline and diesel were reduced by RMB 515/ton and RMB 495/ton, respectively—equivalent to a drop of RMB 0.40 per liter for grade 92 gasoline and RMB 0.43 per liter for grade 95 gasoline. In Shanghai, for example, grade 92 gasoline now costs RMB 7.90 per liter, grade 95 gasoline RMB 8.41 per liter, and grade 0 diesel RMB 7.59 per liter. A private car with a 50-liter fuel tank can save approximately RMB 20.50 when filling up. So far this year, China’s refined oil pricing adjustments have followed a pattern of “eight increases, two decreases, and one suspension.” Although some vehicle owners report that high fuel prices have raised commuting costs and dampened car-buying intentions, data shows that from January to May 2026, retail sales of conventional internal combustion engine (ICE) vehicles totaled 3.402 million units, down 19.5% year-on-year, accounting for 47.9% of the market. In May alone, ICE vehicle sales reached 560,000 units, a 39% year-on-year decline. During the same period, overall passenger vehicle retail sales fell by 22.1% year-on-year, and even new energy vehicle (NEV) sales declined, indicating a broad market downturn. Although ICE vehicle sales dipped during March and April—when oil prices surged sharply—the magnitude of the decline was broadly in line with the overall auto market. After oil prices peaked at their highest level of the year by end-April, ICE vehicle sales dropped significantly in May. However, this coincided with multiple factors, including the industry’s traditional off-season, the transition between old and new national standards for EV batteries, and automakers’ adjustments to ICE production capacity. Hybrid models showed divergent performance: sales of HEVs (hybrid electric vehicles) rose by over 20% year-on-year from January to May, while PHEVs (plug-in hybrid electric vehicles) saw a slight 4.2% decline. Pure electric vehicle (BEV) retail sales reached 2.126 million units from January to May, and NEVs accounted for 62.9% of total vehicle sales in May. Even as oil prices retreated, BEV sales continued to grow. Historical data also indicates that during past periods of significant oil price volatility, the ICE vehicle market did not experience systemic collapse. The current contraction in ICE market share is primarily driven by improvements in NEV product competitiveness, technological advancements, and shifting consumer preferences—not solely by oil price fluctuations. Some newer, fuel-efficient, and more intelligent ICE models have maintained stable sales, while older models continue to languish. In summary, oil price changes exert only temporary and localized effects on the ICE vehicle market and are not the decisive factor determining its long-term trajectory.