Passenger Cars Powertrain Market, Size, Segment and Growth by Forecast Period:(2021-2031)

The global passenger car powertrain market is projected to grow significantly, from US$ 789.4 billion in 2024 to US$ 1,456.27 billion by 2031, exhibiting a compound annual growth rate (CAGR) of 9.14% from 2025 to 2031. This growth is primarily driven by a fundamental shift towards electrification, sustainability, and advanced propulsion technologies within the automotive industry.

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Stricter global emissions regulations and governmental incentives for clean mobility are compelling automakers to heavily invest in electric and hybrid powertrain development. This transition is further bolstered by technological advancements such as high-voltage architectures, sophisticated battery management systems, and integrated smart technologies that improve vehicle performance, efficiency, and connectivity. While internal combustion engines (ICEs) still hold relevance in regions with nascent electric vehicle (EV) infrastructure, the long-term trend strongly favors electrified solutions.

Regionally, Asia-Pacific, particularly China and India, is emerging as a key growth market due to increasing urbanization and supportive government policies. Leading the charge in innovation and market expansion are established automotive players like Toyota, Volkswagen, and Hyundai, alongside specialized powertrain manufacturers such as BorgWarner and ZF Friedrichshafen. However, the industry faces challenges including substantial development costs, the necessity for robust charging infrastructure, and intricate supply chain complexities. Despite these obstacles, the passenger car powertrain market is set for strong expansion, with electrification, hybridization, and smart technologies at its core.

The passenger cars powertrain market is currently undergoing a significant transformation, driven by a confluence of factors including stringent emissions regulations, technological advancements, and evolving consumer preferences.

Market Segmentation Highlights:

• Drive Type: Front-Wheel Drive (FWD) held the largest market share in 2024, primarily due to its cost-effectiveness, fuel efficiency, and suitability for urban and family vehicles, particularly hatchbacks, sedans, and compact SUVs. Other significant segments include Rear-Wheel Drive (RWD) and All-Wheel Drive (AWD).

• Propulsion Type: Internal Combustion Engine (ICE) vehicles continued to dominate the market in 2024. However, the market is experiencing a dynamic shift towards Electric Vehicles (EVs) due to technological advancements and government incentives.

• Sales Channel: The Original Equipment Manufacturer (OEM) channel, encompassing factory-fitted components and new vehicle sales, remains the largest segment in terms of market value. The aftermarket, comprising replacement parts, maintenance, and upgrades, is also experiencing strong and sustained growth.

• Geography: The Asia Pacific (APAC) region dominated the passenger car market in 2024 and is projected to maintain strong growth, led by countries like China, India, and Japan, as well as emerging Southeast Asian economies.

Key Market Drivers and Opportunities:

• Stringent Emissions Regulations and Government Incentives: Governments worldwide are implementing increasingly strict emission standards (e.g., Euro 7, CAFE standards) to combat climate change, compelling automakers to accelerate the development and adoption of electric and hybrid powertrains. Furthermore, financial incentives like tax credits and subsidies are directly stimulating consumer demand for EVs.

• Technological Advancements and Falling Battery Costs: Continuous innovation in battery technology, leading to improved energy density, faster charging, and more efficient electric motors, is making EVs more practical and appealing. Crucially, the steady decline in lithium-ion battery costs is bringing the upfront cost of EVs closer to that of ICE vehicles, a key factor for mass-market adoption.

Market Size and Share Analysis Insights:

The passenger car market's growth is intricately linked to consumer preferences, vehicle segment trends, and technological progress. While ICE vehicles still hold the largest share, particularly in the Asia Pacific region, the robust growth in the OEM channel is driven by increasing global vehicle production and a growing consumer preference for electric and hybrid vehicles. The aftermarket is thriving due to an aging vehicle fleet, increased vehicle longevity, environmental awareness, and customization trends, alongside the ongoing transition to electric vehicles. Regionally, Asia Pacific continues to be the largest and fastest-growing market, with significant contributions from China, India, Japan, Indonesia, Vietnam, and the Philippines.

Market leaders and key company profiles

 Toyota Motor Corporation

 Honda Motor Co. Ltd.,

 Ford Motor Company

 Hyundai Motor Company

 General Motors Company

 Volkswagen Group

 BMW AG

 Daimler AG (Mercedes-Benz Group AG)

 BorgWarner Inc.

 ZF Friedrichshafen AG

Passenger Cars Powertrain Market Report Coverage and Deliverables

The "Passenger Cars Powertrain Market Outlook (2021–2031)" report provides a detailed analysis of the market covering below areas:

• Passenger Cars Powertrain market size and forecast at global, regional, and country levels for all the key market segments covered under the scope

• Passenger Cars Powertrain market trends, as well as market dynamics such as drivers, restraints, and key opportunities

• Detailed Porter's Five Forces and SWOT analysis

• Passenger Cars Powertrain market analysis covering key market trends, global and regional framework, major players, regulations, and recent market developments

• Industry landscape and competition analysis covering market concentration, heat map analysis, prominent players, and recent developments for the Passenger Cars Powertrain market

• Detailed company profiles

The Asia Pacific region is rapidly becoming the undisputed leader in the global passenger car powertrain market, demonstrating both the largest volume and the fastest growth rate. This surge is fueled by a powerful combination of government support, advanced manufacturing capabilities, and increasing consumer demand.

Key Drivers of Growth in Asia Pacific:

• Aggressive Government Policies and Subsidies: Governments across the region are implementing favorable policies and offering subsidies to accelerate the adoption of new energy vehicles (NEVs), particularly electric vehicles (EVs), thereby stimulating demand for advanced powertrains.

• Manufacturing and Supply Chain Supremacy: Asia Pacific countries, especially China, have established robust manufacturing ecosystems and mature supply chains for automotive components, including powertrains, which enables cost-effective production and rapid scaling.

• Rising Urbanization and Economic Growth: Increasing urbanization and a growing middle class with higher disposable incomes are driving up car ownership in the region, leading to a larger market for passenger vehicles and, consequently, their powertrains.

Country-Specific Highlights:

• China: Remains the dominant force, characterized by intense competition among domestic players (e.g., BYD, Nio, XPeng) and international automotive giants. This competitive landscape fosters rapid innovation and a wide array of EV models.

• India: Positioned as the next significant growth frontier. While currently reliant on internal combustion engine (ICE) vehicles, the passenger EV market is experiencing explosive growth from a relatively low base, propelled by new model launches and rising consumer awareness.

• Japan and South Korea: These mature markets are at the forefront of technological innovation, driving the development of highly efficient hybrid systems and cutting-edge battery electric vehicle (BEV) technologies.

• ASEAN Countries (Thailand, Indonesia, Vietnam): Emerging as the "next wave of growth," these nations are attracting significant government support and investment from major Chinese, Japanese, and Korean automakers. This region is swiftly becoming a crucial battleground for market share in the affordable EV segment.

Market Developments:

Recent developments underscore the dynamic nature of the market:

• June 9, 2025: Tata Motors announced a substantial investment of INR 35,000 crore (US$ ~350 billion) over five years in its passenger vehicle business. This investment will focus on product expansion, integration of next-generation technologies, and profitability improvement.

• July 2024: Stellantis expanded its benchmark hybrid powertrain offerings across Europe, introducing 30 hybrid models in 2024 with six more planned by 2026, indicating a broader industry trend towards electrification.

Market Research Report Guidance:

A comprehensive market research report on the Passenger Cars Powertrain market typically covers qualitative and quantitative data segmented by drive type, propulsion, sales channel, and geography. Key sections include:

• Key Takeaways: Highlighting market trends and outlook.

• Research Methodology: Detailing the study's approach.

• Ecosystem and Porter's Analysis: Providing a broader industry context.

• Industry Dynamics: Discussing drivers, restraints, opportunities, and trends, along with their impact analysis.

• Market Scenario: Presenting historical and forecasted market revenues.

• Market Segmentation: In-depth analysis by product type, portability, technology, application, end-user, and geography.

• Competitive Analysis: Including heat map analysis and competitive landscape.

• Industry Landscape Analysis: Covering market initiatives, new developments, mergers, and joint ventures.

• Company Profiles: Detailed profiles of major companies, including their financials, SWOT analysis, and key developments.

• Appendix: Overview of companies, abbreviations, and disclaimers.

Key Sources Referred:

Research relies on various credible sources such as The World Bank, International Council on Clean Transportation, United States Department of Transportation, International Organization of Motor Vehicle Manufacturers, European Automobile Manufacturers’ Association (ACEA), trade databases, and company reports.

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Author's Bio
Akshay
Senior Market Research Expert at Business Market Insights