Automotive Engine Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Vehicle Type (Passenger Cars, Light Commercial Vehicles, Medium & Heavy Commercial Vehicles), By Placement Type (In-Line, V-Type, W-Type), By Fuel Type (Petrol, Diesel, Other Fuels), By Region, Competition, 2019-2029F
Published Date: March - 2025 | Publisher: MIR | No of Pages: 320 | Industry: Automotive | Format: Report available in PDF / Excel Format
View Details Buy Now 2890 Download Sample Ask for Discount Request Customization| Forecast Period | 2025-2029 |
| Market Size (2023) | USD 98.84 Billion |
| CAGR (2024-2029) | 5.59% |
| Fastest Growing Segment | Commercial Vehicles |
| Largest Market | North America |
| Market Size (2029) | USD 136.84 Billion |
Market Overview
Global Automotive Engine Market was USD 98.84 billion in 2023 and is expected to forecast high growth during the forecast period with a CAGR of 5.59% from 2023 to 2029.
The challenges for the automotive engine market are reducing emissions, electrification, and cost pressures. More stringent emissions controls and customer requirements for cleaner vehicles push manufacturers to spend on emissions control technologies like exhaust aftertreatment systems and hybrid powertrains to comply with regulations and consumer demands for low-emitting vehicles. The shift towards electrification, such as battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs), challenges conventional internal combustion engines, which require investments in alternate powertrain technologies and infrastructure to stay competitive in the changing more.
Market opportunities for growth exist in the creation of advanced engine technologies, alternative fuel sources, and hybrid powertrain solutions that provide better performance, efficiency, and environmental sustainability for automotive purposes. Cooperative activities among automakers, engine manufacturers, research centers, and government institutions enable technology development, standardization, and scale economies that reduce costs and spur the adoption of cleaner, more efficient engines. In addition, the shift toward electrification creates opportunities for engine makers to provide hybrid powertrains, range extenders, and other supporting components for electrified vehicles based on their competencies and capabilities to engage in the changing automotive ecosystem. Overall, the car engine industry plays an important part in determining the performance, fuel efficiency, and eco-friendliness of automobiles across various auto segments.
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Market Drivers
Stringent Emission Regulations and Environmental Concerns
The global automotive engine market is profoundly influenced by stringent emission regulations and growing environmental concerns. Governments worldwide have been implementing stricter emissions standards to combat air pollution and reduce the carbon footprint of vehicles. These regulations aim to limit harmful emissions like carbon dioxide (CO2), nitrogen oxides (NOx), and particulate matter (PM) from vehicles. To meet these stringent emission standards, automakers are forced to adopt cleaner and more efficient engine technologies. This has led to a shift from traditional internal combustion engines (ICE) to more environmentally friendly options, including electric and hybrid powertrains. However, internal combustion engines are still evolving to meet these regulations, driving innovation in areas such as fuel injection systems, exhaust after-treatment technologies, and lightweight materials. Additionally, automakers are investing in research and development to optimize the efficiency of internal combustion engines through technologies like turbocharging, direct fuel injection, and variable valve timing. These developments are crucial for reducing emissions and ensuring compliance with emissions regulations. As a result, the automotive engine market has witnessed a growing demand for hybrid and electric powertrains, while internal combustion engines continue to evolve to meet environmental requirements. This shift in focus is expected to continue shaping the market landscape in the coming years.
Advancements in Engine Technology
Continuous advancements in engine technology play a pivotal role in shaping the global automotive engine market. Automakers and engine manufacturers are consistently striving to improve engine efficiency, performance, and reliability. Key technological advancements in this area include The downsizing of engines and their combination with turbocharging has become a prominent trend. Smaller, more efficient engines, often with fewer cylinders, are turbocharged to maintain or even improve performance while reducing fuel consumption and emissions. Direct fuel injection has become a common feature in modern engines. It allows for better control of fuel delivery, resulting in improved combustion efficiency and reduced emissions. These technologies optimize engine performance by adjusting valve timing and lift according to driving conditions, enhancing power output and fuel efficiency. The use of lightweight materials, such as aluminum and composite components, reduces the overall weight of engines and vehicles, contributing to improved fuel economy. Some engines are equipped with cylinder deactivation technology, which can shut down specific cylinders when they are not needed, further improving fuel efficiency. Many engines now feature start-stop systems that automatically shut off the engine when the vehicle is stationary, reducing idling time and fuel consumption. These technological advancements not only improve the performance and efficiency of internal combustion engines but also support the development of hybrid powertrains. As technology continues to evolve, it will be a key driver of innovation and competitiveness within the automotive engine market.
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Increasing Demand for Fuel Efficiency
The automotive industry is witnessing a growing demand for fuel-efficient vehicles, driven by consumer preferences, fuel prices, and regulatory requirements. Fuel efficiency is a critical factor influencing consumer purchasing decisions and is directly linked to engine performance and design. In response to this demand, automakers are investing heavily in the development of engines that offer better fuel economy without compromising performance. This includes the optimization of transmission systems, aerodynamics, and engine efficiency. The development of lightweight materials and advanced engine technologies, as discussed earlier, is also aimed at improving fuel efficiency. Additionally, hybrid and electric powertrains are gaining popularity as they offer improved fuel economy and reduced emissions. The transition to electric vehicles (EVs) represents a significant shift in the automotive engine market, with electric motors replacing traditional internal combustion engines entirely. While EVs are still a relatively small segment of the market, their growth is expected to accelerate as battery technology improves and charging infrastructure expands. As a result, the demand for fuel-efficient engines and powertrains will continue to drive innovation in the automotive engine market, encouraging manufacturers to develop cleaner and more efficient propulsion systems.
Global Economic Conditions and Consumer Preferences
The global automotive engine market is sensitive to economic conditions and consumer preferences. Economic factors, such as GDP growth, employment rates, and consumer spending, can significantly influence the demand for automobiles and, consequently, the engines that power them. During economic downturns, consumers may prioritize cost savings and opt for more fuel-efficient vehicles. Conversely, during periods of economic prosperity, consumers may show a greater inclination toward larger, more powerful vehicles that feature advanced engine technologies. Consumer preferences also play a crucial role in shaping the automotive engine market. As consumers become more environmentally conscious, the demand for eco-friendly vehicles with efficient engines increases. This shift in consumer sentiment has led to the rise of hybrid and electric vehicles, which have gained market share at the expense of traditional internal combustion engines. Additionally, regional variations in consumer preferences and economic conditions impact the types of vehicles and engines that are popular in different parts of the world. For example, in North America, there is a strong demand for pickup trucks and SUVs with powerful engines, while in Europe, smaller, more fuel-efficient vehicles are prevalent. These regional differences influence the product offerings of automakers and engine manufacturers in each market. Therefore, understanding and responding to changing economic conditions and consumer preferences are critical for companies operating in the automotive engine market. Adaptability and a proactive approach to market dynamics are key drivers in this regard.
Technological Convergence and Integration
The automotive engine market is experiencing a convergence of various technologies and integration of systems, leading to more advanced and sophisticated powertrains. This convergence is driven by the need for improved performance, fuel efficiency, and reduced emissions, and it encompasses several key trendsThe integration of electric components into traditional internal combustion engines has led to the development of mild hybrid and full hybrid powertrains. These systems can improve efficiency by using electric power during acceleration and regenerating energy during braking. Modern vehicles increasingly incorporate connectivity features and autonomous driving capabilities. These technologies require advanced engine management systems to optimize performance, manage power distribution, and ensure efficient operation in varying driving conditions. ADAS features such as adaptive cruise control, lane-keeping assist, and collision avoidance systems rely on engine and vehicle sensors, including radar and cameras. These systems are integrated with the engine control unit (ECU) to enhance safety and performance. The collection and analysis of data from vehicles can help improve engine performance, predictive maintenance, and fuel efficiency. As such, data analytics and telematics are becoming integral to engine development and vehicle management. Engine manufacturing is increasingly adopting smart and automated processes, including robotics and 3D printing, to enhance efficiency, reduce costs, and improve quality control.
Key Market Challenges
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Stringent Emission Regulations and Compliance
One of the most pressing challenges in the global automotive engine market is the continuous tightening of emission regulations imposed by governments and international organizations. Regulations are designed to reduce greenhouse gas emissions and air pollution, pushing automakers to develop cleaner and more fuel-efficient engines. Compliance with these regulations requires significant investments in research and development, testing, and the adoption of advanced technologies. This can increase the overall cost of engine development and production. Moreover, the rapid evolution of emission standards necessitates constant innovation, making it challenging for manufacturers to keep up with the latest requirements. A potential solution to this challenge is investing in research and development to create innovative engine technologies that not only meet current regulations but also anticipate future standards. This includes the development of hybrid and electric powertrains, which have the potential to reduce or eliminate emissions entirely. Automakers must also collaborate with governments and regulatory bodies to create realistic and achievable emission targets that balance environmental concerns with industry feasibility.
Rapid Advancements in Electric Vehicle (EV) Technology
The increasing popularity and rapid advancements in electric vehicle (EV) technology pose a significant challenge to the traditional internal combustion engine (ICE) market. As EVs become more affordable and offer longer ranges, they are gaining market share, especially in regions with strong incentives for electric mobility. This shift to EVs challenges the automotive engine market on several fronts. First, it impacts the demand for traditional engines, leading to overcapacity in engine manufacturing facilities. Second, it necessitates a strategic shift in the industry, as automakers must invest in EV technology and infrastructure. Third, the supply chain for electric powertrains is different from that of traditional engines, requiring a reconfiguration of manufacturing processes and resources. To address this challenge, traditional engine manufacturers can consider diversifying their product offerings by developing their own electric powertrains or entering partnerships with EV component manufacturers. By embracing electric mobility, companies can adapt to the changing market landscape and continue to play a significant role in the automotive industry.
Rising Raw Material Costs and Supply Chain Disruptions
The automotive engine market is highly dependent on the availability and cost of raw materials, such as steel, aluminum, and rare earth elements. These materials are used in engine components, and fluctuations in their prices can significantly impact manufacturing costs. Moreover, supply chain disruptions, as witnessed during the COVID-19 pandemic, can disrupt the production of engines and related components. Fluctuations in raw material costs can strain the profit margins of engine manufacturers, especially when prices rise. Additionally, global supply chain disruptions, whether due to natural disasters, geopolitical issues, or pandemics, can lead to shortages of essential components, causing production delays and increased costs. To mitigate the effects of rising material costs and supply chain disruptions, engine manufacturers should consider strategies such as diversifying their supplier base, stockpiling critical components, and investing in advanced inventory management systems. These measures can help ensure a more resilient and flexible supply chain while also hedging against fluctuations in raw material prices.
Technological Obsolescence and Rapid Innovation
The automotive engine market is marked by rapid technological innovation, which can lead to the obsolescence of existing engine designs. As new technologies, such as advanced driver assistance systems (ADAS) and connectivity features, become more integrated with vehicles, engines must be equipped to handle the power and data demands of these systems. Engine manufacturers face the challenge of keeping pace with these technological advancements while ensuring that their products remain competitive and relevant. Failure to do so can lead to a loss of market share and decreased profitability. To address this challenge, engine manufacturers must invest in research and development to stay at the forefront of technology. This includes the development of engines that are optimized for hybrid and electric powertrains, as well as engines that are adaptable to future connectivity and autonomous driving features. Collaboration with technology companies and automotive suppliers can also help engine manufacturers access cutting-edge innovations.
Global Economic Uncertainty and Market Volatility
The automotive engine market is susceptible to global economic conditions and market volatility. Economic factors, such as recessions, trade disputes, and currency fluctuations, can affect consumer purchasing power and, subsequently, the demand for vehicles and engines. Market volatility, which can be driven by geopolitical events, regulatory changes, or industry disruptions, adds another layer of uncertainty. For instance, the imposition of tariffs on certain components or vehicles can disrupt global supply chains and create market instability. To navigate economic uncertainty and market volatility, engine manufacturers should adopt a flexible approach to production and market expansion. Diversifying into emerging markets, where economic conditions may be more stable, can help mitigate the impact of economic downturns in mature markets. Additionally, robust risk management strategies, including financial hedging and scenario planning, can assist in safeguarding against market fluctuations.
Key Market Trends
Electrification and Hybridization of Automotive Engines
One of the most profound trends in the automotive engine market is the move towards electrification and hybridization. The driving force behind this change is a worldwide effort to curb greenhouse gas emissions and minimize the environmental footprint of transportation. Consequently, carmakers are spending a lot of money on electric and hybrid powertrains, which are more efficient and have a lower carbon footprint than conventional internal combustion engines (ICEs). Electric Vehicles (EVs)EVs are gaining traction as battery technology advances to provide greater driving ranges and quicker charging times. Pure electric vehicles use only electric motors and do not need internal combustion engines. Major automakers are launching a vast lineup of EV models, from small city vehicles to high-end SUVs and electric sports cars. Battery electric vehicles (BEVs) have also become quite popular, with players such as Tesla, Nissan, and Ford at the forefront. Hybrid VehiclesHybrid vehicles use internal combustion engines and electric propulsion systems together. Two types of hybrids existmild hybrids and full hybrids. Mild hybrids employ electric power to supplement the internal combustion engine, whereas full hybrids are capable of running on electric power alone for a short distance. Some popular hybrid models are the Toyota Prius, Honda Insight, and Ford Escape Hybrid. Plug-in Hybrid Vehicles (PHEVs)PHEVs are a subcategory of hybrids that permit drivers to recharge the vehicle battery from an outside power source, e.g., a wall socket. These offer longer electric-only driving ranges and lower overall fuel use. Other notable PHEVs are the Chevrolet Volt and Mitsubishi Outlander PHEV. Fuel Cell Vehicles (FCVs)FCVs utilize hydrogen fuel cells to create electricity, which drives an electric motor. FCVs have only water vapor as an emissions byproduct and provide fast refueling opportunities. Toyota and Hyundai have debuted FCV models, though in limited availability. The shift to electrified powertrains is not only for passenger cars; it also includes commercial vehicles. Companies are creating electric trucks, buses, and delivery vans to meet emissions issues in the transport segment. The growing popularity of electrified powertrains is a major move in the automotive engine market, with far-reaching consequences for the conventional ICE segment.
Downsizing and Turbocharging
To meet the stricter emissions and improved fuel efficiency goals, turbocharging and downsizing have become dominant strategies in the automotive engine business. Downsizing is done by decreasing the engine displacement while retaining or even increasing power. Turbocharging works with this method by utilizing exhaust gas to spin a turbine that compresses air that enters the engine, giving a higher amount of power from a smaller engine. The smaller engines consume less fuel, and a turbocharger added to them can deliver additional power when necessary, lowering the fuel consumption of the engine. The smaller engines produce fewer emissions, which is important for meeting tough emissions standards. The turbocharged engines deliver higher power and torque than naturally aspirated engines with the same displacement. The downsized engines can be used in a wide range of applications, from small city cars to high-performance sports cars. Big manufacturers have caught up with this trend, with several of them introducing downsized and turbocharged engines in their models. Some of the examples include Ford's EcoBoost engines, which are used in a variety of cars, and Volkswagen's TSI engines, which are famous for offering a balance between power and fuel efficiency.
Advanced Materials and Lightweighting
The quest for improved fuel efficiency and lower emissions has seen the automotive engine market trend towards advanced materials and lightweighting. Engine parts are being developed and engineered using materials with better strength-to-weight ratios, longevity, and thermal efficiency. Lighter materials like aluminum and composite alloys are now used in place of heavier steel parts in engine fabrication. Aluminum is much lighter compared to conventional cast iron, thus bringing weight savings and better thermal control. A number of contemporary engines consist of aluminum parts. Carbon fiber-reinforced composites and other advanced materials are more commonly utilized in engine parts, such as intake manifolds and valve covers, to minimize weight and enhance efficiency. Advanced cooling systems like electric water pumps and light radiators are utilized to control engine temperatures efficiently while minimizing weight. Engine parts themselves, like pistons and connecting rods, are being reduced in size and optimized to minimize weight without compromising on strength and durability. The blending of light-weighting technology and advanced materials increases the overall engine efficiency of cars, which means better fuel economy and lower emissions. It also enables improved weight balance with positive effects on car handling and performance.
Variable Valve Timing and Cylinder Deactivation
Variable valve timing (VVT) and cylinder deactivation are two technologies that increase the efficiency of internal combustion engines. These technologies are at the heart of the trend of maximizing engine performance while minimizing fuel use and emissions. VVT systems enable exact control over when the intake and exhaust valves of an engine open and close. By modifying valve timing according to driving conditions, the engine can maximize power output and fuel economy. VVT systems are applied in both gasoline and diesel engines. Cylinder deactivation technology makes some cylinders in an engine turn off under low-load or cruising conditions, essentially turning a multi-cylinder engine into a smaller one. This saves on fuel consumption while still providing enough power whenever required. Cylinder deactivation is most common in V8 and V6 engines employed by large cars. These technologies, prompted by fuel economy and emissions needs, significantly affect the market for automotive engines. They are popular with automobile manufacturers, who feature many engines with VVT and cylinder deactivation in their entire model line.
Segmental Insights
Vehicle Type Analysis
The most dominant market share belonged to the in-line segment. When it comes to passenger vehicles, in-line engines are the most common engine type. They come in anything from upscale sedans such as BMW and Mercedes to family cars. That's because they are easy to produce and fit at an affordable price. For that reason, OEM considers it an attractive option. Three or four banks of cylinders may be attached to a single or double crankshaft in a W-engine. W-engines are applied in luxury vehicles and heavy-duty trucks due to the fact that they are more powerful and occupy less space. The most prevalent engine in all high-performance vehicles is the V-type.
Regional Insights
The highest share of revenue accounted for by North America. The region of North America has developed economies such as the United States and Canada. There are well-established original equipment manufacturers in North America, which offer a firm foundation for the strong development and market growth of the region. This is a significant driver of market growth. Commercial vehicle demand in North America will be spurred by increasing infrastructure spending, technological advancements in drive systems, and ongoing development of local-to-global supply chain networks. Throughout the forecast period, The rapidly evolving automotive market in emerging economies such as China and India will drive market growth.
In North America, there is strong demand for fuel-efficient and potent engines, corresponding to a vehicle-population with a preference towards SUVs and trucks. Emission regulations here are also particularly strict, favoring engine research to improve the fuel efficiency as well as diminish emissions. Coupled with an established automotive industry, there are always innovations being driven and conceived in engine configurations.
Europe & CIS experiences a market influenced by a mix of conventional internal combustion engines and increasing movement towards hybrid and electric powertrains. This market has traditionally been a leader in automotive engineering, with a high focus on precision, performance, and sustainability. Environmental pressures to lower carbon emissions have spurred the move to smaller, turbocharged engines as well as high-efficiency diesel engines compliant with Euro emissions regulations. The market in this place is also aided by a strong-established auto supply chain and strong research and development investment.
The Asia Pacific region, meanwhile, has an automotive engine market driven by the volume of car production and sales alone, especially in the likes of China, Japan, and India. The region enjoys a varied demand from low-fuel-efficient and low-cost engines for compact vehicles to high-performance engines for premium cars. The growing urbanization and rising disposable incomes have resulted in a boom in car ownership, creating a competitive market environment. Moreover, the government policies that support electric cars and hybrids are starting to restructure the market, pushing developments in engine technologies that are suitable for electric drivetrains.
South America offers a market with special challenges and opportunities. Economic cycles and differing levels of infrastructure development throughout the continent affect automotive engine trends. There is strong demand for robust and affordable engines that can handle rough terrain and inconsistent fuel quality. Although conventional internal combustion engines are the norm, there is a slow transition towards more fuel-efficient and cleaner engines as regulatory requirements become stricter and environmental consciousness increases among consumers.
The Middle East & Africa market has a market led by both luxury and utility vehicles. Demand for high-performance engines in luxury vehicles is highlighted in wealthy Gulf nations, while in other regions, the emphasis is on powerful and durable engines for commercial and off-road applications. The extreme weather and difficult conditions of driving call for engines that are tough and will perform reliably. The use of leading-edge engine technologies is slowly spreading, driven by worldwide movements towards sustainability and efficiency.
In every region, the global automotive engine market is in a state of constant evolution, driven by advancements in technology, changing regulations, and consumer tastes. Increased fuel efficiency, emission reduction, and the adoption of hybrid and electric technologies are the unifying trends that will define the future of the market. Each of the regions has its own set of characteristics and challenges, making the global automotive engine market a varied and dynamic entity.
Recent Developments
- In June 2023,China's Guangzhou Automobile Group has unveiled the world's first ammonia-powered car engine, marking a significant advancement in alternative fuel technology. This innovation promises reduced carbon emissions and highlights the company's commitment to sustainable transportation. Industry experts are closely watching this development, which could reshape the automotive landscape.
Key Market Players
- CumminsInc.
- Fiat S.p.A.
- Volkswagen AG
- Mitsubishi Heavy Industries, Ltd.
- ABVolvo
- GeneralMotors
- Honda Motor Co., Ltd.
- HyundaiMotor Company
- Scania CV AB
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