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

Executive Summary & Global Market Overview

The global passenger car powertrain market is experiencing a profound transformation, driven by the rapid adoption of electrification, sustainable mobility solutions, and next-generation propulsion technologies. With stringent emissions regulations and government incentives accelerating the shift toward cleaner transportation, automakers are prioritizing investments in electric and hybrid powertrains. Innovations such as high-voltage architectures, intelligent battery management systems, and integrated smart technologies are enhancing efficiency, performance, and connectivity, reshaping the future of automotive propulsion.

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While internal combustion engines (ICEs) remain relevant in regions with underdeveloped EV infrastructure, the long-term trajectory firmly favors electrified solutions. Asia-Pacific—led by China and India—is emerging as a key growth hub, fueled by urbanization and progressive policy frameworks. Major automakers, including Toyota, Volkswagen, and Hyundai, alongside specialized powertrain leaders like BorgWarner and ZF Friedrichshafen, are spearheading innovation and market expansion.

Despite challenges such as high R&D costs, charging infrastructure gaps, and supply chain complexities, the passenger car powertrain market is on a strong growth path. Electrification, hybridization, and smart mobility technologies will remain central to this evolution, positioning the industry for sustained expansion from $789.4 billion in 2024 to an estimated $1,456.27 billion by 2031, reflecting a CAGR of 9.14% (2025–2031).

Passenger Cars Powertrain Market: Segmentation, Drivers, and Growth Analysis

Market Segmentation

The Passenger Cars Powertrain market is analyzed across key segments:

By Drive Type

• Front-Wheel Drive (FWD) – Dominated the market in 2024, favored for its cost-efficiency, fuel economy, and suitability for compact cars and urban vehicles.
• Rear-Wheel Drive (RWD) – Preferred in performance and luxury vehicles for better weight distribution and handling.
• All-Wheel Drive (AWD) – Gaining traction in SUVs and premium segments due to enhanced traction and stability.

By Propulsion Type

• Internal Combustion Engine (ICE) – Maintained market dominance in 2024, particularly in emerging economies.
• Electric Vehicles (EVs) – Experiencing rapid growth driven by technological advancements and regulatory support.

By Sales Channel

• OEM (Original Equipment Manufacturer) – Leads the market, driven by new vehicle production and factory-fitted powertrain systems.
• Aftermarket – Growing due to vehicle maintenance, upgrades, and the increasing lifespan of passenger cars.

By Geography

• Asia-Pacific (APAC) – The largest and fastest-growing market in 2024, fueled by rising vehicle demand in China, India, and Southeast Asia.
• North America & Europe – Significant growth in EV adoption due to stringent emissions regulations.
• Rest of the World – Emerging markets showing gradual uptake of advanced powertrain technologies.

Key Market Drivers & Opportunities

1. Stringent Emissions Regulations & Government Incentives

• Governments worldwide are enforcing stricter emission norms (e.g., Euro 7, CAFE standards) to reduce carbon footprints.
• Tax credits, subsidies, and incentives for EV buyers are accelerating the shift toward electric and hybrid powertrains.

2. Technological Advancements & Declining Battery Costs

• Improvements in battery energy density, charging infrastructure, and motor efficiency are making EVs more viable.
• Falling lithium-ion battery prices are narrowing the cost gap between EVs and ICE vehicles, boosting adoption.

Market Size & Share Insights

Drive Type Trends

• FWD remains dominant, especially in compact and budget-friendly vehicles.
• AWD is gaining popularity in premium and off-road segments.

Propulsion Type Outlook

• ICE vehicles still lead in sales, particularly in APAC.
• EVs are growing rapidly, supported by innovation and policy-driven demand.

Sales Channel Dynamics

• OEMs dominate due to new vehicle production and integrated powertrain solutions.
• Aftermarket is expanding with rising demand for maintenance, retrofits, and performance upgrades.

Regional Market Performance

• APAC leads in market share, driven by high vehicle production and urbanization.
• North America & Europe show strong EV adoption due to regulatory push and consumer awareness.

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

Passenger Cars Powertrain Market: Regional Insights and Growth Prospects

The Passenger Cars Powertrain Market is analyzed across 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 exhibit the most substantial growth during the forecast period, driven by a combination of government policies, manufacturing advancements, and rising consumer demand.

Asia Pacific: The Dominant Growth Hub

The APAC Passenger Cars Powertrain Market is segmented into:

• China, Japan, South Korea, India
• Australia, New Zealand, Indonesia, Malaysia
• Philippines, Singapore, Thailand, Vietnam
• Taiwan, Bangladesh

APAC is not only expected to lead in market volume but also to register the highest growth rate globally. This expansion is fueled by:

• Aggressive government policies and subsidies promoting EV adoption
• Manufacturing and supply chain dominance
• Rapid urbanization and economic growth

Key Markets in APAC:

1. China – The undisputed leader, driven by fierce competition between domestic brands (BYD, Nio, XPeng) and global automakers, accelerating innovation and EV model diversification.
2. India – An emerging powerhouse, transitioning from ICE dominance to rapid EV adoption, supported by new model launches and increasing consumer awareness.
3. Japan & South Korea – Mature markets spearheading hybrid and BEV technology, setting benchmarks in efficiency and innovation.
4. ASEAN Nations (Thailand, Indonesia, Vietnam) – The next growth frontier, attracting investments from Chinese, Japanese, and Korean automakers, particularly in the affordable EV segment.

Report Structure & Key Insights

The Passenger Cars Powertrain Market Research Report provides a comprehensive analysis, structured as follows:

1. Key Takeaways (Chapter 2) – Highlights major market trends and outlook.
2. Research Methodology (Chapter 3) – Details the study’s approach.
3. Ecosystem & Porter’s Analysis (Chapter 4) – Examines industry dynamics and competitive forces.
4. Market Dynamics (Chapter 5) – Identifies drivers, restraints, opportunities, and future trends, supported by impact analysis.
5. Market Forecast (Chapter 6) – Historical revenue data and projections up to 2031.
6. Segmentation Analysis (Chapters 7-9) – Covers market breakdown by:
• Product type, portability, technology, application, and end-user
• Regional analysis (North America, Europe, APAC, MEA, South & Central America)
7. Competitive Landscape (Chapters 10-12) – Features:
• Heat map analysis of key players
• Business strategies, mergers, joint ventures, and market initiatives
• Company profiles (financials, SWOT analysis, key developments)
8. Appendix (Chapter 13) – Includes abbreviations, disclaimer, and company overviews.

Recent Market Developments

• June 2025: Tata Motors announced an investment of INR 35,000 crore (~$350 billion) in its passenger vehicle segment over five years, focusing on next-gen technologies and product expansion.
• July 2024: Stellantis expanded its hybrid powertrain offerings in Europe, introducing 30 hybrid models with plans for six more by 2026, responding to rising consumer demand.

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