Gasgoo Munich- The China Automobile Dealers Association (CADA), in collaboration with Jingzhengu, recently released the "July 2026 China Automobile Residual Value Research Report." The report shows that residual values for all vehicle classes failed to halt their decline in July, maintaining a broad downward trend with no segment managing to buck the trend.
Against this backdrop of industry-wide declines, the divergence between brands has only sharpened.
Industry-Wide Decline, Divergent Performance
The used-car market was sluggish overall in July. Scorching heat and heavy rains, compounded by the traditional off-season, significantly reduced footfall at dealerships. The fallout from the first half's new-car price war persists, as falling prices for new vehicles passed directly through to the used market, putting immense pressure on price defenses.
Dealers are responding with caution. Purchasing strategies have turned broadly conservative; they’d rather buy fewer cars than prioritize clearing existing stock. Online inventory volumes dropped on both a year-on-year and month-on-month basis—not because there aren't cars to buy, but because dealers are actively managing risk and scaling back. The market is currently in an adjustment phase, rebalancing supply and demand.
Of course, a broad decline doesn't mean everyone is falling in lockstep. A closer look at the data reveals three clear lines of divergence.
Image Source: China Automobile Dealers Association (same below)
The first line of divergence is by brand. Luxury, joint-venture, and domestic brands all saw declines, but the magnitude varied widely. Traditional luxury brands suffered the steepest drops, with their brand premiums eroding most noticeably. Joint-venture brands followed; while Honda, Mazda, and Toyota still held the top three spots, they all retreated significantly. Among domestic brands, a polarization emerged: leading mainstream brands faced downward pressure, yet GAC Trumpchi and Tank, despite slight pullbacks, remained firmly in the top two, with 3-year residual values hovering around 55%.
The second line lies within the new-energy sector. While new-energy brands as a whole are still in a volatile adjustment phase, the top tier is beginning to stabilize. Tesla held the top spot with a 3-year residual value of 56.7%, bolstered by its direct-sales model and relatively stable new-car pricing. Leapmotor was one of the few brands to buck the trend this month, rising to 44%. Mainstream players like Li Auto, NIO, and BYD kept their declines within 1%, showing relatively steady momentum. This suggests that after several rounds of price volatility, the secondary market pricing system for leading new-energy brands is gradually finding a floor.
The third line is divergence by segment. Compact SUVs and compact sedans were the "hardest hit" this month, with residual values slipping noticeably. Conversely, the decline in mid-to-large SUVs narrowed. The MPV market took a 2.1% hit due to the launch of new high-end new-energy models. However, in niche segments like off-road vehicles, performance remained relatively stable. Among off-roaders priced under 200,000 yuan, the BJ40 ranked first, while the Haval H5 and the Classic 212 also stood out.
These three lines point to a single conclusion: the more intense the homogenized competition, the harder residual values fall. Conversely, brands with clear product positioning and strong scenario-based barriers prove far more resilient.
The divergence is equally evident at the model level. For plug-in hybrids, the top three 1-year residual values were held by the Tank 400 New Energy (78%), the AITO M8, and the Tank 500 New Energy (77.1%). Among pure electric models, the Xiaomi YU7 (82.8%), Li Auto MEGA (79.7%), and ZEEKR 009 (75.4%) performed exceptionally well. These models share a common trait: they have either established brand recognition in the high-end market or built product barriers in niche segments.
The "technological generation gap" in plug-in hybrids is a textbook example of this divergence. The report notes that the new-car PHEV market has fully entered the "large battery, long range" era. Yet, three-year-old PHEVs typically suffer from short electric range and poor performance when the battery is depleted. This technological gap has accelerated the depreciation of older models. The value erosion caused by such rapid iteration is far more severe in the new-energy era than it was for internal combustion engines.
Gasgoo learned from used-car dealers that the "BBA" trio has seen its residual values plummet over the past two years. One dealer also mentioned Lexus: "Market conditions lately have been a betrayal of earlier customers." Just a few years ago, Lexus was the benchmark for resilience among traditional luxury brands—"used models sold like hotcakes, sometimes even outstripping supply." Now, while Lexus still holds better than BBA and other traditional rivals, its residual value stands at just 53.7%.
What Underpins Resilience?
On the surface, residual value is about used-car prices, but underneath, it reflects a brand's comprehensive strength.
Great Wall Motor CTO Wu Huixiao offers a technical perspective. She believes the core support for residual value comes from two factors: reliable, stable product quality, and maintainable design based on the concept of "return to origin." These two correspond precisely to the key factors influencing second-hand residual value.
First is reliability. Cars are ultimately meant to be used; the higher their daily utility, the more solid their foundation in the used market. The lower the failure rate over the vehicle's full lifecycle and the more stable the quality, the slower the value decay—and the more secure the residual value.
When buying used, consumers worry most about high failure rates and repair costs. If a model has a stable reputation and few minor issues, buyers are willing to pay a fair price even if it's older. Conversely, no matter how rich a new car's configuration, if it breaks down frequently after three years, its used price will struggle to hold up.
A key reason the Tank series PHEVs rank high on residual value lists is that off-road vehicles are less affected by technological generation gaps. Core attributes like mechanical build quality and off-road capability don't depreciate rapidly just because of a year or two of iteration. This inherent stability in product characteristics is itself a crucial pillar of residual value.
Second is ease of repair. Wu Huixiao explicitly states this is a critical factor affecting residual value. Bumps and scrapes are inevitable in daily use; if repairs are hassle-free and affordable, the vehicle's remaining value isn't diluted by high costs, making its resale value naturally firmer.
This point is often overlooked by consumers. Many focus only on new-car price and specs, rarely considering post-purchase repair costs. Yet in the used market, repair costs directly impact residual value. For models with expensive parts, long wait times, or difficult repairs, dealers will lower their offer to hedge against future risks. "Affordable to buy, affordable to use, affordable to maintain" isn't just a marketing slogan—it's a bottom-line logic established at the architectural design stage.
At a deeper level, residual value is a mirror. It reflects not just used-car prices, but a brand's technical prowess, quality control, and reputation. The new-car market fights on marketing and specs, but the used-car market reveals true product strength.
One industry analyst noted that in a relatively hyper-competitive market, residual value demonstrates the worth of a "hard currency" in the secondary circulation stream.
The stability of used-car prices is also inextricably linked to new-car market performance. The aforementioned dealer told Gasgoo that "during this period of deflation, profit margins in the used-car market have fallen below 5%." Purchase prices exceeding resale prices have become the norm—"the market has already undergone one round of elimination." As for expectations for the 2026 used-car market, he had a simple goal: "Just surviving is enough."
