The Gas Cars You Scoff At Are Still the Lifeblood of These Automakers

Guided by global “dual-carbon” goals and reinforced by sustained policy incentives, China’s new-energy vehicle (NEV) market is reshaping the automotive landscape at a visible pace. It has become one of the most powerful engines driving transformation across the global auto industry.

According to data from the China Association of Automobile Manufacturers, China’s NEV production and sales surpassed 16 million units in 2025, reaching 16.626 million and 16.49 million units respectively—both posting year-on-year growth of over 28%. NEVs accounted for 47.9% of all new vehicle sales, up 7 percentage points from the previous year. In practical terms, nearly one out of every two newly sold cars is now a new-energy model.

From the consumer side, market acceptance has clearly shifted from policy-driven adoption to voluntary choice. In December 2025, the retail penetration rate of new-energy passenger vehicles climbed to 59.1%. A total of 147 cities recorded NEV penetration above 50%, with dense consumer clusters forming along China’s eastern coastal regions.

Against this backdrop, “all-in on new energy” has become a defining strategy for many automakers—and for some, a highly successful one. Leveraging the NEV track, multiple domestic brands have achieved leapfrog growth. In 2025, Chinese brands accounted for 69.5% of passenger-vehicle sales, with NEV penetration within domestic brands reaching an impressive 80.9%, effectively breaking the long-standing dominance of traditional joint-venture players.

Yet the rapid rise of NEVs has not entirely crowded out internal combustion engine (ICE) vehicles. While industry attention often centers on soaring NEV penetration, another data point deserves equal notice: in 2025, China still produced 18.25 million gasoline vehicles. Although output declined slightly by 1% year on year, ICE vehicles continued to account for more than half of total automotive production.

In reality, many automakers still rely on gasoline vehicles for steady profitability. For a significant number of companies, ICE models contribute over 50% of total sales. These vehicles are not only reliable volume drivers but also act as “profit engines,” funding new-energy transformation and long-term R&D investment. During the painful transition toward electrification, the sustained contribution of gasoline vehicles provides critical financial cushioning amid intensifying competition.

Gasoline vehicles still carry real weight in today’s market. In 2025, their value was far from eclipsed by the shine of new energy—particularly among joint-venture brands, luxury marques, and leading domestic players, all of which continue to secure both sales volume and profit through robust ICE lineups.

That said, not every automaker with a strong gasoline focus enjoys the same level of market recognition. Data shows that while many companies maintain ICE sales ratios above 50%, those with enduring success tend to share common traits: long-proven products, stable user bases, and strong brand reputations. These gasoline models form the core pillars of corporate profitability.

Among joint-venture brands, the Volkswagen Group stands out. In 2025, gasoline vehicles accounted for more than 90% of sales at both FAW-Volkswagen and SAIC Volkswagen. FAW-Volkswagen delivered 1.587 million units, with its ICE market share rising by 0.9 percentage points against the trend. Models such as the Sagitar and Magotan continue to dominate the compact and midsize sedan segments thanks to durability and strong value for money, serving as dependable sales anchors. SAIC Volkswagen surpassed 1 million units in annual sales, with the Passat and Tiguan L remaining highly competitive. Its gasoline vehicle market share reached 8.3%, contributing the bulk of the company’s revenue and profits.

In the luxury segment, German premium brands still extract significant value from gasoline vehicles. In 2025, over 70% of Mercedes-Benz, BMW, and Audi sales in China came from ICE models.

BMW sold 625,500 vehicles in China, with the 3 Series, 5 Series, and X3 continuing as sales pillars. The 5 Series, in particular, maintained a leading position in the midsize luxury sedan segment. Mercedes-Benz recorded 575,000 units, with strong performances from the C-Class, E-Class, and GLC allowing the brand to pursue electrification at a measured pace. Audi delivered 617,000 vehicles, with FAW-Audi claiming the top share in China’s locally produced luxury gasoline segment. Long-standing bestsellers such as the Q5L and A6L consistently ranked at the top of their categories, underpinning both brand influence and profitability.

Japanese brands have also maintained a strong reliance on gasoline vehicles. Toyota sold 1.78 million units in China in 2025, supported by steady demand for models like the RAV4, Avalon, and Corolla. Nissan posted sales of around 800,000 units, with the Sylphy remaining a perennial bestseller in the compact segment and a key revenue contributor. Honda delivered approximately 700,000 units; although sales of models like the Accord and CR-V dipped slightly, they remain core products with solid competitiveness.

Among domestic brands, gasoline vehicles continue to play a stabilizing role. Hongqi surpassed 400,000 units in 2025, with ICE vehicles accounting for over 60% of sales. Models such as the H5 and HS5 performed strongly in the midsize sedan and SUV segments, setting benchmarks for domestic gasoline offerings. At Geely, SUVs like the Xingyue L and Boyue ranked among top-selling domestic ICE models, providing ample financial support for the brand’s NEV ambitions. For these companies, gasoline vehicles are not merely supplemental—they contribute to technical accumulation, supply-chain maturity, and long-term strategic resilience.

New energy is undoubtedly the future, but gasoline vehicles are not exiting the stage.

Today, electrification is the industry’s shared direction. Nearly every automaker has elevated NEV development to a strategic priority, and NEV sales share has become a key metric of transformation success. In 2025, NEV penetration among Chinese brands reached 80.9%, while mainstream joint-venture brands lagged far behind at just 8.2%. This widening gap has pushed joint ventures to accelerate electrification, rolling out new platforms and models in an effort to catch up.

Policy pressure is also intensifying. The passenger vehicle fuel consumption evaluation standards coming into force in 2026—widely regarded as the most stringent to date—introduce differentiated assessments and full-cycle supervision. Automakers must ensure NEV credit ratios reach 48% in 2026 and 58% in 2027, further reinforcing the push toward electrification.

There is no denying that NEVs will continue to gain share. Advances in battery technology, expanding charging infrastructure, and deeper integration with intelligent systems will steadily enhance product competitiveness, placing increasing pressure on gasoline vehicles.

Globally, the rise of new-energy vehicles is irreversible. As the world’s largest NEV market, China will remain at the forefront of this shift, with penetration rates expected to climb further and NEVs gradually becoming the dominant force.

However, dominance does not equal exclusivity. Gasoline vehicles are unlikely to disappear anytime soon. For a considerable period ahead, they will remain essential contributors to sales and profits for many automakers.

From a demand perspective, gasoline vehicles retain a stable core audience. Long-distance drivers and users without access to fixed charging infrastructure value the convenience of “five-minute refueling,” avoiding charging waits and range anxiety. Consumers in colder northern regions favor the reliability of ICE vehicles in low temperatures, sidestepping range degradation issues. Meanwhile, drivers over 45 often prioritize continuity in driving experience—linear power delivery, mature mechanical feel, and long-established habits make a rapid switch to electric less appealing. These segmented needs ensure continued space for gasoline vehicles.

Technologically, gasoline vehicles are evolving rather than fading. The industry is pushing internal combustion engine efficiency toward the theoretical limit of 48%, using direct injection, variable valve timing and lift, and lightweight materials to significantly reduce fuel consumption.

Hybridization has emerged as a critical transition path. Advanced hybrid systems now achieve ultra-low fuel consumption, meeting stringent efficiency standards while easing energy-replenishment concerns. At the same time, exploration into cleaner fuels such as hydrogen and methanol offers long-term possibilities for ICE vehicles under dual-carbon constraints.

For automakers, the ongoing profitability of gasoline vehicles cannot be ignored. Electrification requires massive investment across R&D, manufacturing upgrades, and supply-chain restructuring. Stable cash flows from ICE models provide the financial backbone for this transition. For joint-venture and luxury brands in particular, gasoline vehicles remain central not only to profits, but also to brand strength and dealer-network stability.

Looking ahead, the market is likely to settle into a structure where new energy leads and gasoline complements. ICE vehicles will increasingly focus on specific scenarios and clearly defined user groups, positioning themselves as refined, niche offerings—continuing to create value in a rapidly evolving automotive era.