A strange scene is playing out in China's auto market: cars are getting harder to sell, yet prices keep climbing. In September the overall passenger-vehicle market fell 28%, the steepest drop of the year. The traditional "golden September, silver October" boom simply never showed up. Worse still was the gasoline-car market, which plunged 44% - the decline widening yet again. Even battery-electric vehicles, usually the bright spot, slipped 9% in September after modest growth between April and August. Oddly though, the average transaction price of a passenger car jumped by RMB 6,000 to RMB 171,000 in September. Source: Cui Dongshu's official WeChat account Everyone is talking about consumption downgrading and a tough job market, so why is the auto market moving in the opposite direction? Are car buyers really spending more? It is small cars that stopped selling On the surface, a RMB 6,000 rise in average price looks like consumption upgrading. But strip away the surface and you find it is a "statistical illusion." Here is the data. In September, sales in the sub-RMB 50,000 segment crashed 60%. Source: Cui Dongshu's official WeChat account What sells below RMB 50,000? Micro cars - familiar names like the Wuling Hongguang MINIEV, the Chery QQ Ice Cream and the Bestune Pony - all took heavy hits. That is easy to explain. Last year a micro EV costing around RMB 40,000 came with a full purchase-tax exemption plus scrappage and trade-in subsidies, so buyers paid almost nothing extra. This year the purchase tax is halved rather than waived, adding roughly RMB 2,000 to that RMB 40,000 car, while trade-in subsidies have shrunk. On top of that, upstream raw-material prices rose and vehicle prices followed. Add it all up and the real cost of buying a car this year is noticeably higher. Plenty of people simply gave up - which is why sub-RMB 50,000 cars really have stopped selling. And when demand in that segment collapses, cheap cars make up a smaller share of the mix, which mechanically pushes the average price up. In short, nobody is buying the cheap cars, so the average looks higher. It is not consumption upgrading at all. Gasoline cars keep sliding The headline of September was of course the 44% collapse in gasoline-car sales - a figure that will have made more than a few joint-venture executives gasp. The initial expectation was that the oil-price spike would last three to five months at most, and that once the tension eased, crude would retreat and gasoline-car sales would steady. Instead oil marched in one direction, reaching an astonishing USD 110 a barrel on October 19. Source: Wind As oil climbed, gasoline-car sales fell further, with the decline widening month by month. By September it had reached 44% - a drop that no price war can fix. This is something deeper: the elimination race for gasoline cars has accelerated. In the first nine months of this year gasoline-car sales came to just 5.53 million units, a full 2.54 million fewer than the same period last year. Gasoline passenger-car sales | Jan-Sep 2025 | Jan-Sep 2026 | Growth Total 8,071,460 | 5,533,079 | -31% Source: CPCA Without February's oil-price shock, joint-venture brands would have had enough time to buy themselves room to adapt. But the cliff-edge sales drop is pushing dealers into the red, which will accelerate the wave of dealership closures. Network contraction is now inevitable. Even if these brands catch up on new-energy technology later, a shrunken dealer network will hold volumes down; without volume, costs stay high and prices lose competitiveness. That, notably, is why Toyota's northern and southern joint ventures (FAW Toyota and GAC Toyota) are being integrated - it is a response to exactly this collapse in gasoline-car demand. Some will argue that once oil falls back, gasoline-car sales will recover on their own. My view: there may be some rebound, but a strong one is unlikely. As battery technology matures and new-energy vehicles get smarter and more comfortable to drive, consumer acceptance will only keep rising. Sharp polarization among China's EV startups Finally, the Chinese EV startups. One phrase sums them up: fire and ice. Start with Leapmotor, which sold close to 80,000 units domestically in September, leading the field by a wide margin. Remember that the overall new-energy market fell 13% in September, yet Leapmotor not only avoided a decline but grew 31%, grabbing share in the RMB 100,000-150,000 bracket on the strength of sheer value for money. Top 6 Chinese EV startups (unit sales) Brand | Sep 2025 | Sep 2026 | Growth Leapmotor 59,769 | 78,202 | +31% Xiaomi 41,948 | 40,015 | -5% Li Auto 33,951 | 31,817 | -6% XPeng 36,577 | 30,599 | -16% AITO 40,619 | 22,612 | -44% NIO 13,558 | 21,277 | +57% Source: CPCA Xiaomi sold 40,000 units in September, down 5%. The main drag was the YU7, sliding from about 22,000 units last year to 12,000 this year - largely because the YU7's spectacular launch last year built a huge order backlog and inflated the comparison base. September also saw the launch of the Pengcheng models, which claimed part of the YU7's production capacity and marketing resources. Model | Sep 2025 | Sep 2026 Xiaomi SU7 19,579 | 15,751 Xiaomi YU7 22,369 | 11,820 Xiaomi Pengcheng N70 - | 7,147 Xiaomi Pengcheng N90 - | 5,297 Source: CPCA XPeng delivered 31,000 units, down 13% year on year. Its real problem is not weak demand but ramping up production of the MONA L03. AITO delivered only 23,000 units in September, down 44%. An adjustment of its business model pushed consumers into a wait-and-see stance and hit order conversion. Li Auto delivered 32,000 units, down 6%. Model by model, this September's growth came mainly from three nameplates: the i6, the i9 and the L8. Model | Sep 2025 | Sep 2026 Li Auto i6 404 | 7,379 Li Auto i8 5,716 | 1,738 Li Auto i9 - | 2,206 Li Auto L6 12,325 | 10,666 Li Auto L7 6,006 | 200 Li Auto L8 2,436 | 4,924 Li Auto L9 3,787 | 2,386 Li Auto MEGA 3,277 | 2,318 Source: CPCA NIO sold 21,000 units, up 57%. Its growth engines are the ES8 and ES9, which together topped 18,000 units in a single month - proof that NIO's high-priced models are selling very well. Model | Sep 2025 | Sep 2026 NIO ES8 2,803 | 10,539 NIO ES9 - | 7,706 NIO ET5T 5,048 | 1,431 NIO ES6 2,930 | 738 NIO ET5 1,441 | 463 NIO EC6 1,084 | 306 NIO ET9 90 | 87 NIO ET7 137 | 7 NIO EC7 - | 25 Source: CPCA One last question for you: if oil prices returned to where they started this year, would gasoline-car sales stage a major rebound?