Automotive Engine Market –Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Vehicle Type (Passenger Cars, Commercial Vehicle, Two-Wheeler), By Placement Type (In-Line, V-Type, W-Type), By Fuel Type (Petrol, Diesel, Other Fuels), By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 99.86 Billion
CAGR (2026-2031)	6.48%
Fastest Growing Segment	Passenger Cars
Largest Market	North America
Market Size (2031)	USD 145.55 Billion

Market Overview

The Global Automotive Engine Market will grow from USD 99.86 Billion in 2025 to USD 145.55 Billion by 2031 at a 6.48% CAGR. An automotive engine functions as the central mechanical power unit in vehicles, utilizing internal combustion or hybrid technology to convert chemical energy into the kinetic force required for mobility. The primary drivers supporting this market include the sustained increase in global vehicle production to meet the transportation needs of a growing urban population and the expanding logistics sector. Additionally, the indispensability of combustion engines within hybrid powertrains ensures their continued demand, as these systems bridge the gap between traditional propulsion and fully electric solutions while adhering to tightening emission standards.

A significant challenge that could impede market expansion is the accelerated global transition toward pure electric mobility, which completely eliminates the need for conventional engines in favor of electric motors. This shift is compounded by regulatory bans on fossil fuel vehicles in several major economies, forcing manufacturers to divert substantial capital toward alternative technologies. However, the current market scope remains vast. According to the European Automobile Manufacturers Association, in 2024, global car sales reached 74.6 million units, underscoring the persistent magnitude of demand for automotive propulsion systems.

Key Market Drivers

Rising global production and sales of passenger and commercial vehicles act as a fundamental catalyst for the automotive engine market. As emerging economies expand their industrial infrastructure and established markets replace aging fleets, the requirement for reliable transportation propels the manufacturing of internal combustion units. This trend is particularly evident in major manufacturing hubs where output volumes are scaling up significantly to meet both domestic consumption and export obligations. Consequently, the correlation between vehicle assembly rates and engine procurement remains strong, ensuring steady order volumes for powertrain manufacturers. According to the International Organization of Motor Vehicle Manufacturers, March 2024, in the '2023 Production Statistics', global vehicle production increased by 10 percent year-on-year to reach a total of 93.5 million units.

Simultaneously, the accelerated adoption of hybrid powertrain architectures is revitalizing the sector by integrating traditional engines with electric propulsion systems. Unlike fully electric vehicles, hybrids utilize a distinct internal combustion engine, thereby sustaining production lines and validating continued engineering investment in thermal efficiency technologies. This synergy allows manufacturers to comply with stricter emission protocols without abandoning fuel-based engine infrastructure. According to Toyota Motor Corporation, May 2024, in the 'Financial Results for the Fiscal Year Ended March 31, 2024', global sales of its hybrid electric vehicles surged by 32.1 percent to approximately 3.7 million units. Highlighting the continued financial magnitude of this sector, according to Cummins Inc., in 2024, the company recorded full-year sales of 11.7 billion USD specifically within its engine segment.

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Key Market Challenges

The accelerated global transition toward pure electric mobility poses a fundamental challenge to the growth of the automotive engine market. This shift replaces the internal combustion engine with battery-powered electric motors, directly eliminating the need for traditional mechanical powertrains in a growing segment of vehicles. As governments enforce stricter emission regulations and schedule bans on fossil fuel vehicles, automakers are compelled to divert capital from engine development to electrification technologies. This reallocation of resources limits the innovation and production capacity available for conventional engines, progressively shrinking their market share.

The impact of this trend is evident in the rapid decline of fossil fuel propulsion systems in major markets. According to the European Automobile Manufacturers’ Association, in the first nine months of 2025, the combined market share of petrol and diesel cars in the European Union fell to 37%, a significant decrease from the 46.8% recorded during the same period in 2024. This contraction illustrates how the rising adoption of electric vehicles is actively eroding the volume of traditional engines required by the industry.

Key Market Trends

The adoption of hydrogen internal combustion engine technology is accelerating, particularly in the commercial vehicle sector, as manufacturers seek to decarbonize heavy-duty transport using established mechanical architectures. By leveraging existing piston infrastructure with zero-carbon hydrogen fuel, this technology offers a viable alternative to battery-electric systems for long-haul logistics where range and payload are critical constraints. This strategic shift toward adaptable fuel solutions is evident in recent industrial developments. According to Cummins Inc., February 2025, in the 'Cummins reports strong fourth quarter and full year 2024 results' press release, the company introduced the Cummins HELM™ engine platforms, which are explicitly designed to run on low-carbon fuel types including hydrogen, thereby securing a versatile powertrain solution for future fleet requirements.

Simultaneously, the widespread integration of 48V mild hybrid systems is transforming the passenger car market by providing a cost-effective route to strict emission compliance. These architectures recover kinetic energy to assist the internal combustion engine, significantly enhancing fuel efficiency without the high manufacturing costs associated with full electrification. This technical evolution is driving a substantial shift in consumer purchasing patterns across major markets. According to the European Automobile Manufacturers' Association, July 2025, in the 'Hybrids gain ground as gasoline and diesel lose market share in Europe' report, hybrid electric vehicles, which encompass mild hybrid powertrains, reached a record market share of 34.8% in the European Union during the first half of 2025, highlighting the technology's dominance in the transition from pure fossil fuel propulsion.

Segmental Insights

The passenger car segment represents the fastest-growing category in the global automotive engine market due to escalating demand for personal mobility and rising vehicle production rates in emerging economies. This growth is further propelled by strict emission standards from regulatory bodies like the United States Environmental Protection Agency, which compel manufacturers to develop fuel-efficient internal combustion technologies. Additionally, the increasing adoption of hybrid vehicles supports sustained market expansion as these models continue to utilize engines alongside electric systems. These combined economic and regulatory factors ensure that passenger cars remain the primary driver of industry development.

Regional Insights

North America holds a dominant position in the Global Automotive Engine Market, driven by high consumer demand for light commercial vehicles and utility trucks that utilize powerful internal combustion engines. This leadership is supported by a strong manufacturing infrastructure and the presence of major automotive corporations. Furthermore, stringent emission and efficiency regulations from the United States Environmental Protection Agency compel continuous technological advancements, such as turbocharging and direct fuel injection. These factors collectively foster a robust environment for engine production and development, securing the region’s status as a key global hub.

Recent Developments

• In June 2024, Renault Group and Geely Holding Group officially launched Horse Powertrain Limited, a new joint venture headquartered in London dedicated to the hybrid and internal combustion powertrain market. With each parent company holding a 50% stake, the standalone entity was established to design, develop, and manufacture engines, transmissions, and hybrid systems for global automotive brands, including Nissan and Mitsubishi Motors. The company expects to generate approximately €15 billion in annual revenues and produce five million powertrain units per year across 17 global plants, focusing on low-emission technologies and alternative fuels to support the transition to sustainable mobility.
• In May 2024, Toyota Motor Corporation, Mazda Motor Corporation, and Subaru Corporation announced a strategic collaboration to develop a new generation of internal combustion engines tailored to electrification and carbon neutrality. The three automakers agreed to refine their respective signature engine technologies—including inline-four, rotary, and horizontally-opposed engines—to ensure compatibility with diverse carbon-neutral fuels such as liquid hydrogen, biofuels, and synthetic e-fuels. This joint effort aims to optimize the integration of engines with electric drive units, enabling more compact powertrains that improve vehicle aerodynamics while maintaining the supply chain for internal combustion components.
• In April 2024, Weichai Power unveiled a heavy-duty diesel engine that achieved a world-record brake thermal efficiency of 53.09% at the World Congress on Internal Combustion Engines in Tianjin, China. This technological breakthrough was officially recognized by the international testing organization TÜV SÜD and the China Automotive Technology & Research Center. The company’s research team accomplished this milestone by optimizing four critical systems—combustion, air intake, fuel delivery, and friction reduction—specifically advancing high-expansion combustion and mixed-flow pressurization technologies. This achievement set a new benchmark for the global internal combustion engine industry, promising significant fuel savings for commercial vehicles.
• In February 2024, Cummins Inc. announced the launch of its next-generation X15 diesel engine in North America, designed to meet the 2027 aligned regulations from the U.S. EPA and CARB. This new product is part of the company’s HELM 15-liter fuel-agnostic platform, which utilizes a common base engine architecture to support various fuel types while delivering higher efficiency and lower emissions. The advanced diesel X15 retains the performance ratings of its predecessor but features improved greenhouse gas efficiency and optimized integration with automated transmission and axle technologies to serve the heavy-duty on-highway market.

Key Market Players

• Mercedes-Benz
• Cummins Inc.
• Toyota Motor Corporation
• BMW
• General Motors
• Honda Motor Company Ltd
• Hyundai Motor Company
• Suzuki Motor Corporation
• Stellantis N.V.
• Scania AB

By Vehicle Type	By Placement Type	By Fuel Type	By Region
Passenger Cars Commercial Vehicle Two-Wheeler	In-Line V-Type W-Type	Petrol Diesel Other Fuels	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Automotive Engine Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Automotive Engine Market, By Vehicle Type:

• Passenger Cars
• Commercial Vehicle
• Two-Wheeler

• Automotive Engine Market, By Placement Type:

• In-Line
• V-Type
• W-Type

• Automotive Engine Market, By Fuel Type:

• Petrol
• Diesel
• Other Fuels

• Automotive Engine Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE