Core Viewpoint - The fuel vehicle market in China shows signs of recovery after a challenging period, with sales figures indicating a slight increase in May, although the overall trend remains under pressure from the rise of electric vehicles [3][4][5]. Sales Performance - In May, domestic sales of traditional fuel passenger vehicles reached 854,000 units, marking a month-on-month increase of 2.2% and a year-on-year decline of 1% [4][5]. - Total passenger vehicle sales in May were 1.884 million units, reflecting a month-on-month growth of 5.2% and a year-on-year increase of 12.3% [4][5]. Market Dynamics - The market for fuel vehicles is experiencing a shift, with domestic brands like Chery, Geely, and Changan narrowing the gap with joint venture brands [3][12]. - The promotional efforts for fuel vehicles remain high, with a promotion intensity of 22.5% in May, which is an increase from previous months [6][7]. Consumer Behavior - A significant portion of consumers, particularly those with annual incomes below 150,000 yuan, show a preference for fuel vehicles due to concerns over purchase costs and convenience [6][10]. - The anxiety surrounding electric vehicle charging infrastructure continues to impact consumer choices, with many preferring the driving experience of fuel vehicles [6][10]. Competitive Landscape - Joint venture brands have seen a notable recovery in sales, with major players like Volkswagen and Nissan reporting significant month-on-month growth in A-class sedan sales [7][8]. - However, there is a growing divide among joint venture brands, with some experiencing declines while others, like Toyota, adapt to market demands by introducing new electric models [9][10]. Autonomous Brands Performance - Chinese brands accounted for 1.622 million passenger vehicle sales in May, representing a year-on-year growth of 22.6% and capturing 69% of the total market share [10][11]. - Notable performances in the new energy vehicle segment were recorded, with BYD, Geely, and Changan leading in sales growth [10][11]. Future Outlook - Despite the current recovery, experts predict a long-term decline in the fuel vehicle market share, with projections indicating that new energy vehicles could account for 70%-80% of total sales by 2027-2028 [13][16]. - The industry is expected to continue balancing fuel and electric vehicle offerings, as companies recognize the importance of maintaining a presence in the fuel vehicle market for profitability [16][17].

Core Insights - The Shanghai Auto Show 2023 highlighted the dominance of new energy vehicles (NEVs), with over 70% of the 1,300 exhibited vehicles being NEVs, while traditional fuel vehicles still accounted for 30% of the new models presented [1][11]. Group 1: New Energy Vehicles - NEVs were the main attraction at the Shanghai Auto Show, with major brands like BBA and Porsche showcasing multiple electric models [1][3]. - The presence of new energy brands such as Hongmeng Zhixing and NIO drew significant crowds, indicating a strong consumer interest in electric vehicles [1][3]. Group 2: Fuel Vehicles - Despite the rise of NEVs, fuel vehicles experienced a resurgence in interest, with many consumers drawn to classic models and unique offerings at the show [5][11]. - The presence of iconic models like the Lexus LS400 and the new Volvo XC90 attracted considerable attention, suggesting a nostalgic appeal among consumers [5][10]. Group 3: Consumer Preferences - Over 40% of consumers still prefer fuel vehicles, valuing the mechanical feel and driving experience that electric vehicles cannot replicate [11][16]. - Many consumers expressed a desire for a balance between the emotional value of fuel vehicles and the technological advancements of NEVs, indicating a potential market for hybrid offerings [20][23]. Group 4: Market Trends - The automotive market is likely to see a coexistence of fuel and electric vehicles, with each catering to different consumer needs [20][23]. - Fuel vehicles must innovate and incorporate smart technologies to remain competitive against the rapid advancements in NEVs [20][23].