When heading down to the underground second-floor parking garage, Du, a used-car dealer who collects vehicles door-to-door, was bending over to examine the headlights of a car. Spotting the seller, with whom he had closed multiple smooth deals before, he stood straight and greeted him with an easy smile.
“This is a colleague from our editorial department. He’d like to ask you about the current used car market.”
When asked whether rumors of sliding prices for used gasoline vehicles held true, the hearty smile faded from Du’s face. His brows furrowed slightly, and his tone turned solemn. “Prices have been dropping for a long time. Since March this year, in just two months, cars have depreciated as much as they would in one or two years under normal market conditions.”
Du admitted that since the start of the year, resale values of used gasoline cars have failed to stabilize amid surging oil prices and a flood of new pure electric vehicle launches, trapped in a sustained downward spiral. Worse still, dealers who buy new stock may end up taking losses if the vehicles sit unsold for merely a week or two, forced to resell below their acquisition cost.
Dealers now face a lose-lose predicament. If they keep purchasing inventory, they struggle with stockpiled vehicles, cash flow crunches and mounting losses. If they stop buying cars entirely, their idle capital accrues steep interest charges, and showrooms lack other revenue streams to sustain daily operations. All used gasoline car dealers have been swept up by the sharp price crash, left stuck between a rock and a hard place.
1. Market Rules Upended: Used Gasoline Cars Lose Two Years’ Worth of Value in Two Months
“The price slump this year is strikingly obvious,” Du explained. The used gasoline car market follows predictable cyclical patterns, yet this year’s price collapse has shattered all established norms.
“Traditionally, dealers clear out inventory ahead of the Lunar New Year before restocking in the post-holiday season. If stock remains scarce after the new year, dealers will raise acquisition prices. Those who paid top dollar for vehicles naturally try to shore up market prices to avoid losses. As a result, the market usually stays steady through April and May, only edging down afterward.”
This year, however, prices of used gasoline vehicles have declined nonstop after the Lunar New Year with no sign of stabilization. According to Du, two major factors triggered the depreciation wave: mass launches of new electric vehicles and skyrocketing oil prices. “We’ve seen a stark drop in gasoline car sales ever since geopolitical conflicts pushed oil prices up. Large-displacement models, in particular, are nearly unsellable.”
Macro market data mirrors this downturn. In May, new energy vehicles captured a 62.9% retail penetration rate in China, cementing the irreversible shift toward pure electric mobility. Corresponding declines in market share and resale prices have become an unavoidable pain point for gasoline cars.
In May alone, new conventional gasoline cars carried an average sticker price of 166,000 yuan with average discounts of 25,000 yuan, representing a 14.9% price cut. For the first five months of the year, discounted new passenger vehicles averaged 241,000 yuan, with average price reductions hitting 32,000 yuan or 13.1%.
Discounts on new cars quickly trickle down to the secondary market. Price floors have collapsed across the board, from entry-level hatchbacks to premium luxury vehicles. Wild price volatility has stripped the market of its capacity for short-term self-regulation.
“Back in late April, we bought a Honda Fit Yue Edition for over 50,000 yuan. After more than a month without a buyer, selling it now guarantees a loss,” Du cited real cases from his lot. “We also acquired an Infiniti QX50 with 95,000 kilometers that same month for 78,000 yuan, and it even came with factory-fitted Bose audio. We finally offloaded it last week for only 65,000 yuan — a loss of more than 10,000 yuan on a single unit.”
The depreciation is even more extreme for luxury models. One premium gasoline sedan purchased in March for 220,000 yuan can now only fetch 180,000 yuan for an identical unit with matching mileage, condition, color and configuration just two to three months later.
Used car dealers rely on two primary sales channels: wholesale to fellow dealers and direct retail to private consumers.
For wholesale transactions, profit hinges on speed. Larger premium showrooms in Shanghai prefer sourcing stock from mid-tier dealers like Du for consistent vehicle quality, accepting higher wholesale rates in exchange for reliable inventory. Industry insiders jokingly refer to inter-dealer vehicle flipping as a “musical chairs game”: each dealer passes stock to another, either turning a small markup or swallowing losses, with whoever holds the inventory last bearing the brunt of market drops. As overall transaction volumes shrink, cross-dealer stock circulation has grown far more frequent.
Direct sales to private buyers yield higher retail prices and offer longer breathing room on inventory; vehicles typically break even if sold within a month.
Yet inventory cycles have stretched drastically. Research from the China Automobile Dealers Association shows the average used car inventory cycle hit 40 days in May, with 35.9% of dealers carrying stock for over 30 days. Based on Du’s on-the-ground observations, more than 30% of used car operators are running at a sustained loss.
“Consumer demand for used gasoline cars has evaporated,” Du said, using Shanghai as an example. Today’s buyers have a vast selection of nearly-new electric alternatives, while gasoline vehicles face license plate restrictions. Many consumers opt for public transit instead of purchasing gas-powered cars entirely.
Du’s dealership network spans first- and second-tier cities including Shanghai, Beijing, Guangzhou, Chengdu, Hangzhou and Xiamen, yet even his scaled operation cannot buffer the impact of falling prices and shrinking market size.
“The secondary market has transformed entirely,” he said. Years ago, sellers held the upper hand with consistent, standardized vehicle valuations. Today, buyers dictate pricing: a car holds value only if someone wants it; without demand, its listed price becomes meaningless, creating a market with nominal prices but no real transactions.
Sales volumes have plummeted. Du’s team used to move 500 to 600 vehicles monthly via wholesale and retail combined; the figure has since tumbled to 300–400. Countless small lots have shuttered. Shops holding only a dozen units collapse the moment inventory stalls, and Du has grown accustomed to watching industry peers exit the business.
2. Used EV Market Picks Up Steam, Yet Cannot Prop Up the Entire Secondary Sector
While used gasoline cars spiral downward, the second-hand electric vehicle segment has gained momentum, emerging as a rare bright spot for dealers.
“Many dealers have completely reversed their business strategies,” Du noted. Previously, operators focused exclusively on gasoline cars and shunned EVs; now they prioritize electric models for slimmer yet more reliable profits that avoid heavy losses. Though new energy vehicles lack stellar retention rates, they boast far faster turnover. In the Yangtze River and Pearl River Deltas, mature charging infrastructure boosts consumer acceptance, turning used EVs into a viable business line.
Data from the China Passenger Car Association (CPCA) validates this divergent trend. In April, when overall used car transaction volumes fell both month-on-month and year-on-year, second-hand EV sales surged to 143,000 units, rising 2% month-on-month and 21.6% year-on-year. In the first four months combined, used EV transactions reached 548,000 units, a nearly 30% year-over-year increase.
A childhood friend operating a car lot in northern China confirmed identical nationwide trends. Margins on gasoline cars have thinned dramatically; dealers net only roughly 5,000 yuan per unit, with loan commissions pushing total earnings barely above 10,000 yuan. In contrast, Tesla and Li Auto models sell effortlessly, with Tesla standing out as a consistent fast mover.
Among luxury brands tracked for three-year residual value in May, Tesla ranked second at 56.5%, trailing only Porsche. Its resale valuations have proven remarkably resilient: a 2022 Tesla model acquired for around 120,000 yuan last year retains nearly the same acquisition price in 2026.
Still, the used EV trade carries clear operational risks. Dealers avoid stocking any model set to receive a new generation launch, as product overhauls often trigger blanket depreciation across an entire lineup.
Amid broad market devaluation, certain brands have bucked the trend with stable resale pricing, including Jiayue, WM Motor and HiPhi. The Jiayue 01, for instance, holds a steady secondary market price between 90,000 and 100,000 yuan.
These counter-cyclical price trends reveal hidden opportunities within the market chaos. The industry is undergoing ruthless consolidation: dishonest operators relying on one-off deceptive sales are rapidly being weeded out, while third-party vehicle inspection platforms such as Chabos are pushing the trade toward standardized, regulated operations amid growing growing pains.
Widespread industry competition and accelerated consolidation have rippled through the entire automotive value chain, from upstream component suppliers and OEM manufacturers to downstream new and used car dealers, as well as automotive media. Every segment navigates growing transformation pains. The shakeout eliminates inefficient and unethical operators while forcing the whole industry to upgrade toward standardization, compliance and sustainable development.
For individual practitioners, however, industry restructuring translates to an existential fight for survival. Du voiced widespread anxiety across the trade: industry insiders widely forecast that used gasoline car prices will keep sliding through the year, with stabilization unlikely until next year. Many operators throw in the towel after prolonged losses with no light at the end of the tunnel.
Holding out through the prolonged market downturn and waiting for a recovery to stage a turnaround has become the sole hope for surviving used car dealers and the broader industry. Yet with market headwinds intensifying by the month, the automotive sector’s cold winter stretches on with no clear end in sight.
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