Passenger Cars Powertrain Market Outlook (2024–2031)
The global passenger cars powertrain market is projected to grow from US$ 789.4 billion in 2024 to US$ 1,456.27 billion by 2031, registering a CAGR of 9.14% from 2025 to 2031.
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Executive Summary and Global Market Insights:
The global powertrain market for passenger cars is undergoing a significant transformation, driven by the automotive industry’s rapid pivot toward electrification, sustainability, and next-generation propulsion technologies. With governments across the globe tightening emissions regulations and incentivizing clean mobility solutions, automakers are ramping up investments in electric and hybrid powertrains.
Technological advancements—such as high-voltage architectures, intelligent battery management systems, and integrated digital technologies—are accelerating the development of powertrains that deliver enhanced performance, efficiency, and connectivity. While internal combustion engines (ICEs) will continue to have a presence, particularly in regions where electric vehicle (EV) infrastructure is still maturing, the long-term trajectory points decisively toward electrified powertrains.
Regionally, Asia-Pacific, led by China and India, is emerging as a key growth engine, supported by rapid urbanization and proactive government policies promoting electric mobility. Global automotive leaders such as Toyota, Volkswagen, and Hyundai, along with specialized powertrain suppliers like BorgWarner and ZF Friedrichshafen, are spearheading innovation and market penetration.
Nevertheless, the industry faces notable challenges, including high R&D and production costs, inadequate charging infrastructure in certain regions, and ongoing supply chain disruptions. Despite these obstacles, the market is well-positioned for sustained growth, underpinned by the accelerating adoption of electrified, hybridized, and smart powertrain technologies.
Passenger Cars Powertrain Market – Segmentation Analysis
The Passenger Cars Powertrain market is segmented based on drive type, propulsion, sales channel, and geography—each playing a critical role in shaping the industry landscape.
By Drive Type
- Front-Wheel Drive (FWD)
- Rear-Wheel Drive (RWD)
- All-Wheel Drive (AWD)
In 2024, Front-Wheel Drive emerged as the leading segment, owing to its cost-efficiency, compact design advantages, and superior fuel economy. It remains the preferred choice for hatchbacks, sedans, and compact SUVs, particularly suited for urban mobility and family use.
By Propulsion Type
- Internal Combustion Engine (ICE)
- Electric
Despite the global push toward electrification, ICE vehicles continued to dominate the market in 2024, especially in the Asia Pacific region. However, the electric vehicle (EV) segment is rapidly gaining momentum due to rising environmental awareness, government incentives, and advancements in battery technology.
By Sales Channel
- OEM (Original Equipment Manufacturer)
- Aftermarket
The OEM segment holds the majority share, supported by rising global vehicle production and the growing adoption of factory-fitted electric and hybrid powertrains. Meanwhile, the aftermarket segment is expanding steadily, driven by increasing vehicle longevity, personalization trends, and the growing need for EV-compatible components and maintenance services.
By Geography
The market is segmented into five key regions: North America, Europe, Asia Pacific (APAC), Middle East & Africa, and South & Central America. The Asia Pacific region dominated the global market in 2024, with China, India, and Japan leading the charge. Rapid urbanization, rising disposable incomes, and expanding middle-class populations are key drivers of demand in emerging Southeast Asian economies such as Indonesia, Vietnam, and the Philippines.
Market Drivers and Growth Opportunities
1. Stringent Emissions Regulations and Government Incentives
Tighter emissions norms, such as the Euro 7 standards in Europe and CAFE regulations in the U.S., are compelling automakers to innovate in cleaner propulsion systems. Government-backed incentives like tax breaks, rebates, and subsidies are accelerating consumer adoption of electric and hybrid powertrains, significantly boosting market growth.
2. Technological Innovations and Declining Battery Prices
Advancements in electric powertrain technologies—such as enhanced battery energy density, faster charging capabilities, and improved motor efficiency—are making EVs more practical and accessible. Most notably, the falling cost of lithium-ion battery packs is narrowing the price gap between EVs and ICE vehicles, making EVs increasingly attractive to mainstream consumers.
Market Size and Share Highlights
- Drive Type: FWD leads due to its affordability and urban utility, while AWD and RWD remain favored in performance and premium segments.
- Propulsion Type: ICEs still lead globally, but EVs are growing at an exponential rate, driven by technology and regulation.
- Sales Channel: OEMs dominate, supported by new vehicle sales growth, while the aftermarket segment sees robust expansion through aging fleets and evolving maintenance needs.
- Geography: Asia Pacific holds the largest market share, driven by population density, industrial growth, and evolving mobility needs.
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
Geographical Scope and Asia Pacific Market Analysis – Passenger Cars Powertrain Market
The geographical scope of the Passenger Cars Powertrain Market Report spans five key regions: North America, Asia Pacific, Europe, the Middle East & Africa, and South & Central America. Among these, the Asia Pacific (APAC) region is projected to witness the most substantial and rapid growth during the forecast period.
The APAC market encompasses China, Japan, South Korea, India, Australia, New Zealand, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Taiwan, and Bangladesh. This region is expected to not only lead the global passenger car powertrain market in terms of volume but also record the highest growth rate through the forecast horizon. The accelerated expansion of this market is driven by a confluence of factors, including:
- Aggressive government policies and subsidies promoting vehicle electrification and cleaner propulsion technologies
- Advanced manufacturing ecosystems and supply chain efficiency, making APAC a global hub for powertrain production
- Rapid urbanization and strong economic growth, driving up consumer demand for personal mobility
China remains the dominant force in the region, supported by hyper-competition among domestic players such as BYD, Nio, and XPeng, along with aggressive participation from global automakers. This dynamic environment fosters rapid innovation and provides a diverse range of electric vehicle (EV) options for consumers.
India is emerging as the next high-potential market. While internal combustion engine (ICE) vehicles still dominate, the EV segment is expanding rapidly, fueled by increasing consumer awareness, government incentives, and the launch of new, affordable models.
Japan and South Korea, representing mature markets, continue to drive innovation in hybrid and battery electric vehicle (BEV) technologies, contributing significantly to global advancements in powertrain efficiency and performance.
Meanwhile, Southeast Asian countries such as Thailand, Indonesia, and Vietnam are witnessing a surge in EV market activity. With rising government support and foreign investment—particularly from China, Japan, and Korea—these nations are evolving into key battlegrounds for capturing market share in the affordable EV category.
Passenger Cars Powertrain Market Report Structure
The report delivers a comprehensive analysis of the market, integrating both qualitative and quantitative insights across segments such as drive type, propulsion, sales channel, and geography. Key components of the report include:
- Chapter 2: Key Takeaways – Summary of market trends and outlook
- Chapter 3: Research Methodology
- Chapter 4: Ecosystem & Porter’s Five Forces Analysis
- Chapter 5: Market Dynamics – Drivers, restraints, opportunities, and trends, including impact assessment
- Chapter 6: Market Overview – Historical revenue and future market projections through 2031
- Chapters 7 to 9: Detailed segmentation by product type, propulsion technology, end-user application, and region
- Chapter 10: Competitive Landscape – Heat map analysis of key players
- Chapter 11: Industry Landscape – Highlights of strategic developments such as mergers, partnerships, and global expansions
- Chapter 12: Company Profiles – In-depth profiles of major players with financial data, product offerings, SWOT analysis, and recent developments
- Chapter 13: Appendix – Includes glossary, abbreviations, and disclaimer
Key Market Developments
The market analysis incorporates data from primary and secondary sources, including corporate publications, industry associations, and proprietary databases. Notable recent developments include:
- June 9, 2025 – Tata Motors announced a strategic investment of INR 35,000 crore (~US$ 350 billion) in its passenger vehicle business over the next five years. The investment will focus on expanding product lines, integrating next-generation technologies, and enhancing overall profitability.
- July 2024 – Stellantis expanded its hybrid powertrain portfolio across Europe. The company introduced 30 hybrid models in 2024, with plans to launch six additional models by 2026, responding to growing demand for hybrid vehicles across European markets.
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Author’s Bio
Akshay
Senior Market Research Expert at Business Market Insights
