The ethanol-based vehicle market for passenger cars is expected to reach 5.21 million units by 2020, compared to 3.72 million units in 2015, Technavio says in a report.

This represents a compound annual growth rate (CAGR) of almost 7%.

According to the research firm, the passenger car segment will likely grow at a faster rate than commercial vehicles. The overall ethanol-based vehicle market is forecast to top 7 million units by 2020.

"Factors that majorly drive the sales of passenger flexible fuel vehicles (FFVs) include higher product availability and better awareness in response to emission norms," said Technavio analyst Siddharth Jaiswal.

In 2015, the Americas accounted for 91% of the market. Technavio said that Brazil and the US, the largest producers and consumers of automotive ethanol, will continue to lead the market for ethanol-based vehicles over the forecast period.

The Europe, the Middle East and Africa (EMEA) region will see double-digit growth through 2020 due to efforts in Europe to reduce greenhouse gas emissions. The Asia Pacific, meanwhile, is forecast to reach a CAGR of over 12% for the 2016-2020 period.