Plummeting ICE Vehicle Prices Slash Resale Values as EVs Accelerate Market Takeover

Starting April 2025, the average price of new domestic internal combustion engine (ICE) vehicles dropped by RMB 16,000, representing a 6.8% decline. By 2026, the average per-vehicle discount widened to RMB 23,000, pushing the overall price reduction to 17.2%. Significant promotions emerged across multiple regions: the BMW 7 Series saw discounts as high as RMB 301,000; the Audi A6L’s base model was priced at just RMB 260,000; the entry-level Nissan Sylphy fell to RMB 60,000; and the Land Rover Range Rover Evoque L dropped below RMB 170,000. Persistently falling new-car prices have sharply eroded used-car residual values. The three-year resale value of typical ICE passenger vehicles has declined to 40%, down more than 25 percentage points from 2020 levels. In May 2026, the average transaction price of used ICE vehicles fell over 8% year-on-year. Frequent price volatility has heightened risks for used-car dealers when acquiring inventory, prompting most to adopt conservative operating strategies. These market shifts are driven by multiple factors: the nationwide enforcement of the China VI-B emissions standard starting July 2026 has led consumers to anticipate further ICE vehicle price cuts, causing many to hold off on purchases. Meanwhile, incentives for new energy vehicles (NEVs) have become substantially more generous, with local purchase subsidies reaching up to RMB 20,000—higher than the RMB 15,000 cap for ICE vehicles. Consumer preference has clearly shifted toward NEVs, with brands like Tesla and Li Auto enjoying brisk trading in the used-car market, while ICE used vehicles face sluggish demand.