Passenger Cars Powertrain Market Outlook (2025–2031)

The global passenger car 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%. This surge is driven by the automotive industry's rapid transition toward electrification, sustainability, and next-generation propulsion technologies.

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Key Market Trends & Drivers

  • Electrification Dominates: Stricter emissions regulations and government incentives are accelerating the adoption of electric (EV) and hybrid (HEV/PHEV) powertrains, with automakers prioritizing high-efficiency battery systems, advanced power electronics, and smart energy management.
  • Declining Reliance on ICEs: While internal combustion engines (ICEs) remain relevant in regions with underdeveloped EV infrastructure, long-term growth is shifting decisively toward zero-emission and hybrid solutions.
  • Technological Advancements: Innovations such as high-voltage architectures, ultra-fast charging, and AI-driven powertrain optimization are enhancing performance, range, and connectivity.
  • Asia-Pacific Leads Growth: Markets like China and India are pivotal due to urbanization, policy support, and increasing EV adoption.
  • Competitive Landscape: Automotive leaders (Toyota, Volkswagen, Hyundai) and powertrain specialists (BorgWarner, ZF Friedrichshafen) are investing heavily in R&D to capture market share.

Challenges & Barriers

  • High Development Costs: Electrification requires substantial investment in R&D and manufacturing retooling.
  • Infrastructure Gaps: Limited charging networks in emerging markets hinder EV adoption.
  • Supply Chain Complexities: Battery material shortages and geopolitical factors pose risks.



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

The Passenger Cars Powertrain Market is analyzed based on key segments: drive type, propulsion, sales channel, and geography. Each segment plays a crucial role in shaping market dynamics and growth trends.

Market Segmentation

By Drive Type

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

By Geography

  • Asia-Pacific (APAC) – Held the largest market share in 2024, fueled by strong demand in China, India, and Southeast Asia.
  • North America & Europe – Significant markets with increasing EV adoption due to stringent emissions regulations.

Key Market Drivers and Opportunities

  1. Stringent Emissions Regulations & Government Incentives

Governments worldwide are enforcing strict emission norms (e.g., Euro 7, CAFE standards) to reduce carbon footprints. Financial incentives, such as tax credits and subsidies for EVs, are accelerating the shift toward cleaner powertrains.

  1. Technological Advancements & Declining Battery Costs
  • Improvements in battery energy density, charging speeds, and motor efficiency are enhancing EV performance.
  • Falling lithium-ion battery costs are making EVs more affordable, narrowing the price gap with ICE vehicles.
  1. Rising Demand for Fuel-Efficient & High-Performance Vehicles
  • Consumers increasingly prefer FWD and AWD systems for urban mobility and off-road capabilities.
  • The EV segment is expanding due to growing environmental awareness and advancements in autonomous driving technologies.

Market Size and Share Insights

  • FWD remains dominant in compact and economy cars, while AWD gains popularity in SUVs and premium segments.
  • ICE powertrains still lead, but EV adoption is accelerating, especially in APAC and Europe.
  • OEM sales dominate, but the aftermarket is growing due to vehicle longevity and electrification trends.
  • APAC leads in market share, with strong growth in China and emerging Southeast Asian markets.



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



The geographical scope of the Passenger Cars Powertrain market report is divided into five regions: North America, Asia Pacific, Europe, Middle East & Africa, and South & Central America. The Passenger Cars Powertrain market in Asia Pacific is expected to grow significantly during the forecast period.

The Asia Pacific Passenger Cars Powertrain market is segmented into China, Japan, South Korea, India, Australia, New Zealand, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Taiwan, and Bangladesh. The Asia-Pacific (APAC) region is poised to not only dominate the global passenger car powertrain market in terms of volume but also to witness the highest and fastest growth rate in the coming years. This exceptional growth is a multifaceted phenomenon driven by a powerful combination of government ambition, manufacturing prowess, and burgeoning consumer demand.

The Asia Pacific region experiences substantial growth in its Passenger Cars Powertrain market because of Aggressive Government Policies and Subsidies, Manufacturing and Supply Chain Supremacy, Rising Urbanization and Economic Growth etc.

China continues to be the unparalleled leader. Its market is characterized by hyper-competition among domestic brands (like BYD, Nio, and XPeng) and international giants, leading to rapid innovation and a wide variety of EV models available to consumers.

India represents the next frontier of growth. While currently dominated by ICE vehicles, the passenger EV market is expanding at an explosive rate from a low base, driven by new model launches and growing consumer awareness.

With mature markets such as Japan and South Korea driving the technological innovation through highly efficient hybrid systems and cutting-edge BEV technology. Other ASEAN countries like Thailand, Indonesia, and Vietnam are emerging as the next wave of growth. With government support and investment from major Chinese, Japanese, and Korean automakers, this region is quickly becoming a key battleground for market share in the affordable EV segment.

Passenger Cars Powertrain Market Research Report Overview

This report provides a comprehensive analysis of the Passenger Cars Powertrain Market, incorporating both qualitative and quantitative data across key segments such as drive type, propulsion, sales channel, and geography.

Report Structure

Chapter 1: Introduction

  • Overview of the report scope and objectives.

Chapter 2: Key Takeaways

  • Summary of major market trends, insights, and future outlook.

Chapter 3: Research Methodology

  • Explanation of research approach, data sources, and analytical frameworks.

Chapter 4: Market Ecosystem & Porter’s Analysis

  • Examination of industry stakeholders, value chain, and competitive forces.

Chapter 5: Market Dynamics

  • Drivers: Factors fueling market growth.
  • Restraints: Challenges hindering expansion.
  • Opportunities: Emerging prospects for industry players.
  • Future Trends: Projected developments shaping the market.
  • Impact Analysis: Assessment of market influences.

Chapter 6: Market Revenue Analysis

  • Historical revenue trends (past data).
  • Market forecast up to 2031.

Chapters 7-9: Market Segmentation & Regional Analysis

  • Breakdown by product type, portability, technology, application, and end-user.
  • Geographic coverage: North America, Europe, Asia Pacific, Middle East & Africa, and South & Central America.
  • Revenue projections and growth drivers for each segment.

Chapter 10: Competitive Benchmarking

  • Heat map analysis of key market players.

Chapter 11: Industry Landscape Analysis

  • Overview of market initiatives, partnerships, mergers & acquisitions, and joint ventures.
  • Competitive landscape assessment.

Chapter 12: Company Profiles

  • Detailed analysis of leading companies, including:
    • Business overview
    • Product & service offerings
    • Financial performance
    • SWOT analysis
    • Recent developments

Chapter 13: Appendix

  • Company snapshot
  • List of abbreviations
  • Disclaimer

Recent Market Developments

The Passenger Cars Powertrain Market is analyzed through primary and secondary research, incorporating corporate publications, industry associations, and databases. Notable developments include:

  • June 9, 2025: Tata Motors announced an investment of INR 35,000 crore (~US$ 350 billion) over five years to expand its passenger vehicle business, focusing on next-gen technologies and profitability.
  • July 2024: Stellantis expanded its hybrid powertrain offerings in Europe, launching 30 hybrid models in 2024 with plans for six additional models by 2026, responding to growing consumer demand.



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