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

Passenger Cars Powertrain Market

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, expanding at a CAGR of 9.14% from 2025 to 2031.

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Executive Summary and Global Market Insights

The passenger car powertrain industry is undergoing a profound transformation, driven by the global push for cleaner, more efficient mobility solutions. Governments across the world are tightening emissions standards and rolling out incentives for electric and hybrid vehicles, prompting automakers to prioritize the development of next-generation powertrains.

Key trends shaping the market include the rise of electrification, adoption of high-voltage platforms, and integration of advanced battery management and smart propulsion technologies. These innovations are not only enhancing performance and efficiency but also improving connectivity and driving experience.

While internal combustion engines (ICEs) still maintain relevance—particularly in regions where electric vehicle (EV) infrastructure remains underdeveloped—the long-term trajectory clearly favors electrified and hybrid powertrains.

Regionally, Asia-Pacific, led by China and India, stands out as a major growth hub, supported by rapid urbanization, evolving consumer preferences, and favorable policy frameworks. Global automotive leaders such as Toyota, Volkswagen, and Hyundai, along with specialized powertrain innovators like BorgWarner and ZF Friedrichshafen, are at the forefront of this transition.

Despite facing challenges including high R&D costs, infrastructure gaps, and supply chain pressures, the market remains on a strong growth path. The future of the passenger cars powertrain sector lies in electrification, hybridization, and intelligent systems, positioning it as a cornerstone of the next-generation mobility landscape.

Passenger Cars Powertrain Market Segmentation Analysis

The passenger cars powertrain market is segmented by drive type, propulsion type, sales channel, and geography. Each of these segments plays a vital role in shaping the market’s current dynamics and future trajectory.

By Drive Type

The market is segmented into Front-Wheel Drive (FWD), Rear-Wheel Drive (RWD), and All-Wheel Drive (AWD).
Among these, Front-Wheel Drive emerged as the dominant segment in 2024. Its widespread adoption is primarily attributed to its cost-efficiency, fuel economy, and space-saving design, making it the preferred choice for compact cars, sedans, and urban SUVs. FWD’s popularity continues to grow, particularly among family-focused and city-oriented vehicles.

By Propulsion Type

The propulsion segment is divided into Internal Combustion Engine (ICE) and Electric Vehicles (EVs).
In 2024, ICE vehicles continued to lead the global market, especially in regions like Asia Pacific, where affordability and fueling infrastructure are well-established. However, EVs are rapidly gaining ground due to environmental regulations, technological advancements, and falling battery costs, signaling a major shift in future market dynamics.

By Sales Channel

The sales channel is categorized into Original Equipment Manufacturer (OEM) and Aftermarket.
The OEM segment dominates the market, driven by growing global vehicle production, rising consumer preference for hybrid and electric vehicles, and the integration of advanced powertrain technologies.
Meanwhile, the Aftermarket segment is expanding steadily, fueled by an aging vehicle fleet, increasing vehicle lifespans, rising awareness of environmental concerns, and growing demand for customization and EV upgrades.

By Geography

Geographically, the market is segmented into North America, Europe, Asia Pacific, Middle East & Africa, and South & Central America.
The Asia Pacific region led the market in 2024 and is projected to maintain its dominance. Growth is supported by high vehicle production, increasing urbanization, economic growth, and rising disposable incomes in countries like China, India, and Japan. Emerging Southeast Asian economies such as Indonesia, Vietnam, and the Philippines are also contributing to regional market expansion.

Market Drivers and Opportunities

1. Stringent Emissions Regulations and Government Incentives

Global efforts to curb emissions and combat climate change have prompted stricter vehicle emission standards, such as Euro 7 in Europe and CAFE in the U.S.. In response, automakers are investing heavily in electric and hybrid powertrains. Financial incentives, including subsidies and tax credits, are also accelerating EV adoption, thereby boosting market growth.

2. Technological Advancements and Declining Battery Costs

Continuous innovation in powertrain technologies—particularly in battery efficiency, charging infrastructure, and electric motor design—is making electric vehicles more accessible and attractive. The steady decline in lithium-ion battery prices, a key component in EVs, is reducing the price gap between ICE vehicles and EVs, encouraging mass-market adoption.

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 Market Dynamics: Passenger Cars Powertrain Market

The Passenger Cars Powertrain Market Report encompasses five key regions: North America, Asia Pacific, Europe, Middle East & Africa, and South & Central America. Among these, the Asia Pacific region is expected to demonstrate the most significant growth throughout the forecast period.

Asia Pacific – The Powerhouse of Growth

The Asia Pacific (APAC) passenger cars powertrain market includes China, Japan, South Korea, India, Australia, New Zealand, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Taiwan, and Bangladesh. The region is not only poised to lead the global market in terms of volume but is also projected to experience the fastest compound annual growth rate (CAGR) in the coming years.

This exceptional expansion is fueled by a strategic convergence of:

• Proactive government policies and subsidies incentivizing electric and hybrid vehicle adoption,
• Robust manufacturing and supply chain infrastructure, and
• Rising urbanization and increasing consumer demand for energy-efficient, sustainable mobility solutions.

Key Country Highlights

• China remains the undisputed leader, driven by hyper-competitive dynamics between domestic giants (e.g., BYD, Nio, XPeng) and global manufacturers. This environment fosters continuous innovation and offers consumers a broad array of electric vehicle (EV) models.
• India is emerging as the next major growth frontier. Though currently dominated by internal combustion engine (ICE) vehicles, the country's EV segment is witnessing explosive growth, propelled by new model launches, improving infrastructure, and heightened consumer awareness.
• Japan and South Korea, with their mature automotive industries, are at the forefront of technological advancements in hybrid and battery electric vehicle (BEV) technologies.
• ASEAN countries such as Thailand, Indonesia, and Vietnam are fast becoming attractive markets, bolstered by government incentives and foreign investments from major Japanese, Chinese, and Korean automakers. These countries are key to expanding the affordable EV segment.

Passenger Cars Powertrain Market Report Structure

• Chapter 2: Key takeaways – a concise summary of trends and future market outlook.
• Chapter 3: Research methodology – detailing the qualitative and quantitative data sources.
• Chapter 4: Ecosystem and Porter’s Five Forces analysis – examining value chain participants and competitive pressure.
• Chapter 5: Industry dynamics – an in-depth look at market drivers, challenges, opportunities, and emerging trends, along with impact analysis.
• Chapter 6: Market overview – presenting historical data and market forecasts up to 2031.
• Chapters 7 to 9: Segmentation by drive type, propulsion, sales channel, and regional analysis for North America, Europe, Asia Pacific, MEA, and South & Central America.
• Chapter 10: Competitive landscape – includes heat map analysis of major players.
• Chapter 11: Industry landscape – highlights strategic developments such as mergers, partnerships, and global expansion.
• Chapter 12: Company profiles – detailed insights into key companies, including business overview, financials, SWOT analysis, product portfolio, and recent developments.
• Chapter 13: Appendix – glossary, list of abbreviations, and disclaimers.

Recent Market Developments

• June 9, 2025: Tata Motors announced a ₹35,000 crore (US$ ~350 billion) investment over the next five years in its passenger vehicle business. The funds will support product diversification, integration of next-generation technologies, and profitability enhancement.
• July 2024: Stellantis significantly expanded its hybrid powertrain portfolio across Europe, launching 30 hybrid models in 2024, with six additional models planned by 2026. This move underscores the growing consumer demand for hybrid mobility solutions in the region.

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