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

Passenger Cars Powertrain Market

Passenger Cars Powertrain Market Outlook

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 passenger cars powertrain market is undergoing a profound transformation, driven by the accelerating shift toward electrification, sustainability, and next-generation propulsion technologies. In response to increasingly stringent emissions regulations and expanding government incentives for clean mobility, automakers are making substantial investments in electric and hybrid powertrain development.

Technological advancements—such as high-voltage electric architectures, intelligent battery management systems, and integrated smart technologies—are significantly improving vehicle performance, efficiency, and connectivity. While internal combustion engines (ICEs) still hold relevance in regions with limited EV infrastructure, the industry's long-term trajectory is clearly moving toward electrified powertrains.

Regional Outlook

Asia Pacific, led by China and India, is emerging as a key growth region due to rapid urbanization, rising vehicle ownership, and strong government support for electric vehicles. Europe and North America also continue to see steady progress in electrification, driven by regulatory mandates and growing consumer demand for sustainable mobility.

Key Industry Players

Leading global automakers such as Toyota, Volkswagen, and Hyundai, along with specialized powertrain manufacturers like BorgWarner and ZF Friedrichshafen, are at the forefront of innovation and market expansion. These players are focusing on scalable electrified solutions, modular powertrain systems, and strategic partnerships to strengthen their market positions.

Market Challenges

Despite promising growth, the market faces several challenges:

• High R&D and production costs
• Limited charging infrastructure in emerging regions
• Complex global supply chains and raw material constraints

Nevertheless, the continued push for green transportation, combined with rapid advancements in electrification and smart mobility technologies, is expected to sustain strong market momentum in the years ahead.

Passenger Cars Powertrain Market Segmentation Analysis

The passenger cars powertrain market is segmented based on drive type, propulsion, sales channel, and geography. These key segments provide a comprehensive understanding of market dynamics and growth patterns.

By Drive Type:

• Front-Wheel Drive (FWD)
• Rear-Wheel Drive (RWD)
• All-Wheel Drive (AWD)

In 2024, Front-Wheel Drive led the global market. FWD remains dominant due to its cost efficiency, better fuel economy, and compact packaging—features particularly valued in hatchbacks, sedans, and compact SUVs. Its widespread application in urban and family-oriented vehicles continues to reinforce its market leadership.

By Propulsion Type:

• Internal Combustion Engine (ICE)
• Electric

The ICE segment maintained a significant lead in 2024, particularly in emerging economies. However, the market is undergoing a fundamental transition, driven by growing adoption of electric vehicles (EVs) in response to sustainability goals, evolving regulations, and technological progress.

By Sales Channel:

• Original Equipment Manufacturer (OEM)
• Aftermarket

The OEM segment accounted for the largest market share in 2024, supported by global increases in vehicle production and rising consumer demand for factory-integrated electric and hybrid systems. Meanwhile, the aftermarket segment is growing steadily, fueled by vehicle aging, increased longevity, environmental consciousness, customization trends, and the gradual electrification of vehicles.

By Geography:

• North America
• Europe
• Asia Pacific
• Middle East & Africa
• South & Central America

The Asia Pacific region dominated the market in 2024, led by key automotive hubs such as China, India, and Japan. Rapid urbanization, rising disposable income, and growing middle-class populations are boosting vehicle ownership across Southeast Asian countries including Indonesia, Vietnam, and the Philippines.

Market Drivers and Opportunities

1. Stringent Emissions Regulations and Government Incentives

Rising environmental concerns have led governments worldwide to impose stricter emissions standards—such as Euro 7 in Europe and CAFE standards in the U.S.—compelling automakers to accelerate the shift to cleaner powertrains. Simultaneously, government-backed incentives like tax credits, subsidies, and EV-friendly policies are stimulating consumer adoption of electric and hybrid vehicles.

2. Technological Advancements and Declining Battery Costs

Technological innovation is reshaping the powertrain landscape. Improvements in battery energy density, charging infrastructure, and electric motor efficiency are making EVs more viable and attractive. Importantly, the declining cost of lithium-ion batteries—the most expensive EV component—is narrowing the price gap between electric and ICE vehicles, driving broader market adoption.

Market Size and Share Insights

• Drive Type:
  Front-Wheel Drive leads due to its practical advantages in everyday vehicles, especially in cost-sensitive and space-optimized designs.
• Propulsion:
  While ICE vehicles dominate for now, EVs are rapidly gaining momentum, particularly in developed markets and among environmentally conscious consumers.
• Sales Channel:
  OEMs continue to hold the largest market share, but the aftermarket segment is expected to experience strong long-term growth, especially with rising EV maintenance needs and increasing vehicle lifespan.
• Geography:
  Asia Pacific remains the global leader in passenger car powertrain market share, thanks to favorable government policies, expanding automotive production, and growing consumer demand.

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

Geographical Scope and Market Dynamics: Passenger Cars Powertrain Market

The Passenger Cars Powertrain Market Report covers five key regions: North America, Asia Pacific, Europe, Middle East & Africa, and South & Central America. Among these, the Asia Pacific (APAC) region is anticipated to witness the most significant and fastest growth during the forecast period.

Asia Pacific Market Overview

The APAC region, comprising China, Japan, South Korea, India, Australia, New Zealand, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Taiwan, and Bangladesh, is expected to dominate the global passenger car powertrain market by volume. The region’s rapid growth is driven by a powerful mix of factors, including:

• Aggressive Government Policies and Subsidies promoting electric and hybrid vehicles.
• Manufacturing and Supply Chain Leadership backed by regional industrial strength.
• Rising Urbanization and Economic Growth, boosting vehicle demand and infrastructure development.

China remains the market leader, characterized by fierce competition among domestic players (such as BYD, Nio, and XPeng) and international OEMs. This hyper-competitive environment drives rapid innovation and a broad range of EV offerings for consumers.

India is emerging as a high-growth frontier, with ICE vehicles still dominant but the EV segment expanding rapidly. The growth is fueled by new model introductions and increasing consumer awareness.

Japan and South Korea, known for their technological leadership, are advancing hybrid and battery electric vehicle (BEV) technologies. Meanwhile, ASEAN markets—such as Thailand, Indonesia, and Vietnam—are witnessing growing government support and major investments from Chinese, Japanese, and Korean automakers, positioning them as upcoming hubs for affordable EV production and sales.

Passenger Cars Powertrain Market Report Structure

• Chapter 2 – Key Takeaways: Summarizes major market trends and future outlook.
• Chapter 3 – Research Methodology: Outlines the data sources and methodologies used.
• Chapter 4 – Ecosystem & Porter’s Analysis: Examines value chain and competitive forces.
• Chapter 5 – Market Dynamics: Discusses key drivers, restraints, opportunities, and future trends, along with impact analysis.
• Chapter 6 – Market Scenario: Provides historical data and market forecasts through 2031.
• Chapters 7–9 – Market Segmentation: Breaks down the market by drive type, propulsion, sales channel, and geography across major regions.
• Chapter 10 – Competitive Analysis: Includes a heat map and strategic overview of leading players.
• Chapter 11 – Industry Landscape: Describes business strategies such as mergers, product launches, and joint ventures.
• Chapter 12 – Company Profiles: Features detailed profiles, financials, SWOT analysis, and key developments of major market players.
• Chapter 13 – Appendix: Lists abbreviations and includes a company overview and disclaimer.

Key Market Developments

• June 9, 2025 – Tata Motors announced an investment of INR 35,000 crore (approx. US$ 350 billion) over the next five years in its passenger vehicle division. This investment aims to expand its product line, integrate next-generation technologies, and enhance profitability.
• July 2024 – Stellantis announced a significant expansion of its hybrid powertrain offerings in Europe. In response to increasing customer demand, the company had 30 hybrid models in 2024 and plans to launch six more by 2026.

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