Passenger Cars Powertrain Market Poised for Strong Growth, Driven by Electrification and Innovation

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, reflecting a CAGR of 9.14% from 2025 to 2031. This expansion is fueled by the automotive industry's rapid transition toward electrification, sustainability, and next-generation propulsion technologies.

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Market Dynamics: A Shift Toward Clean Mobility

Stricter emissions regulations and government incentives are accelerating the adoption of electric (EV) and hybrid powertrains. Automakers are investing heavily in high-voltage architectures, advanced battery systems, and smart technologies to enhance efficiency, performance, and connectivity. While internal combustion engines (ICEs) remain relevant in regions with underdeveloped EV infrastructure, the long-term trend favors electrified solutions.

Regional Insights: Asia-Pacific Leads Growth

The Asia-Pacific region, particularly China and India, is a key growth driver, supported by rising urbanization and favorable policies. Meanwhile, established automotive leaders—including Toyota, Volkswagen, Hyundai, BorgWarner, and ZF Friedrichshafen—are spearheading innovation and market expansion.

Challenges and Opportunities

Despite strong growth prospects, the industry faces hurdles such as high RD costs, charging infrastructure gaps, and supply chain complexities. However, advancements in hybridization, battery technology, and smart powertrain systems present significant opportunities.

Conclusion

The passenger cars powertrain market is on a robust growth trajectory, with electrification and intelligent technologies shaping the future of automotive propulsion. As automakers and suppliers adapt to evolving demands, the sector is set for transformative expansion over the next decade.

Passenger Cars Powertrain Market Segmentation Analysis

Key segments that contributed to the derivation of the Passenger Cars Powertrain market analysis are drive type, propulsion, sales channel, and geography.

• By drive type, the Passenger Cars Powertrain market is segmented into Front-Wheel Drive, Rear-Wheel Drive, All-Wheel Drive. The Front-Wheel Drive segment dominated the market in 2024.
• By propulsion type, the Passenger Cars Powertrain market is segmented into ICE, Electric. ICE segment dominated the market in 2024.
• By sales channel, the Passenger Cars Powertrain market is segmented into OEM, and Aftermarket.
• By geography, the Passenger Cars Powertrain market is segmented into. APAC region dominated the market in 2024.

Passenger Cars Powertrain Market Drivers and Opportunities:

Stringent Emissions Regulations and Government Incentives

Governments across the globe are implementing increasingly strict regulations on vehicle emissions to combat climate change and improve air quality. These regulations, such as the Euro 7 standards in Europe and Corporate Average Fuel Economy (CAFE) standards in the United States, are compelling automakers to accelerate their transition to electric and hybrid powertrains. Furthermore, many governments offer substantial financial incentives, including tax credits and subsidies, to encourage consumers to purchase electric vehicles, thereby directly stimulating demand for these advanced powertrains.

Technological Advancements and Falling Battery Costs

Continuous innovation in powertrain technology is a primary driver of market growth. Significant improvements in battery energy density, charging speeds, and the efficiency of electric motors are making EVs more practical and appealing to a broader range of consumers. Critically, the cost of lithium-ion battery packs, the single most expensive component in an EV, has been steadily declining. This trend is bringing the upfront cost of EVs closer to that of their ICE counterparts, a key factor in driving mass-market adoption.

Passenger Cars Powertrain Market Size and Share Analysis

By drive type, Front-Wheel Drive (FWD), Rear-Wheel Drive (RWD), and All-Wheel Drive (AWD) – the growth of the passenger car market is closely linked to evolving consumer preferences, vehicle segment trends, and technological advancements. FWD remains the most prevalent drive type globally, especially in hatchbacks, sedans, and compact SUVs. Its popularity is driven by cost-effectiveness, fuel efficiency, and packaging advantages, making it ideal for urban and family-oriented vehicles.

By propulsion type, the passenger car market is experiencing a dynamic shift, with both internal combustion engine (ICE) vehicles and electric vehicles (EVs) showing robust growth, albeit with markedly different trajectories. ICE vehicles continue to dominate global passenger car sales, especially in regions like Asia Pacific, which held the largest market share in 2024 and is projected to maintain strong growth.

By sales channel, the OEM channel, representing factory-fitted components and new vehicle sales, continues to dominate overall market value. Growth in the OEM channel is driven by rising global vehicle production, increasing consumer preference for electric and hybrid vehicles, and the expansion of connected car ecosystems. The passenger cars aftermarket, which includes replacement parts, accessories, maintenance, and upgrades, is also experiencing strong and sustained growth. Key growth drivers include an aging vehicle fleet, increased vehicle longevity, environmental awareness, customization trends, and the transition to electric vehicles.

By geography, the passenger car market is experiencing robust but regionally varied growth, shaped by economic development, urbanization, government policies, and evolving consumer preferences. Asia Pacific is the largest and fastest-growing passenger car market, led by China, India, and Japan. Southeast Asian countries like Indonesia, Vietnam, and the Philippines are also witnessing surges in demand due to rising incomes and urbanization.

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

Passenger Cars Powertrain Market Overview

The global Passenger Cars Powertrain market is segmented into 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 experience the most substantial growth during the forecast period, driven by a combination of government policies, manufacturing strength, and rising consumer demand.

Asia Pacific Market Segmentation

The APAC Passenger Cars Powertrain market is analyzed across:

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

APAC is expected to dominate global market volume while also registering the highest growth rate, fueled by:

• Aggressive government policies and subsidies
• Manufacturing and supply chain dominance
• Rapid urbanization and economic expansion

Key Market Dynamics

• China remains the undisputed leader, with fierce competition between domestic players (BYD, Nio, XPeng) and global automakers, accelerating innovation and EV model diversity.
• India is emerging as a high-growth market, transitioning from ICE dominance to rapid EV adoption, supported by new model launches and increasing consumer awareness.
• Japan and South Korea continue to drive technological advancements, particularly in hybrid systems and battery-electric vehicle (BEV) technologies.
• ASEAN nations (Thailand, Indonesia, Vietnam) are becoming pivotal growth hubs, attracting investments from major automakers and positioning themselves as key players in the affordable EV segment.

Report Structure Insights

1. Key Takeaways (Chapter 2) – Highlights major market trends and outlook.
2. Research Methodology (Chapter 3) – Outlines the study’s approach.
3. Ecosystem Porter’s Analysis (Chapter 4) – Examines industry dynamics.
4. Market Drivers Restraints (Chapter 5) – Identifies growth factors, challenges, and future trends with impact analysis.
5. Historical Forecast Revenue Analysis (Chapter 6) – Covers market performance up to 2031.
6. Segmentation Analysis (Chapters 7-9) – Breaks down the market by product type, technology, application, end-user, and region.
7. Competitive Landscape (Chapters 10-12) – Features heat map analysis, business strategies, mergers, joint ventures, and company profiles (SWOT, financials, key developments).
8. Appendix (Chapter 13) – Includes abbreviations, disclaimer, and company overviews.

Recent Market Developments

• Tata Motors (June 2025) announced a ₹35,000 crore (~$350 billion) investment in its passenger vehicle segment over five years, focusing on next-gen technologies and product expansion.
• Stellantis (July 2024) expanded its hybrid powertrain offerings in Europe, launching 30 hybrid models in 2024 with six more expected by 2026.

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