<p>Aligned with the objectives delineated by the United Nations Sustainable Development Goals (SDGs), particularly “SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action)”, lignocellulosic fibers present a sustainable and environmentally benign alternative to synthetic materials across a multitude of industrial applications The transition of the automotive sector towards sustainable and lightweight materials has elevated lignocellulosic fiber-reinforced composites as viable alternatives to traditional materials. The incorporation of these bio-based composites is in accordance with rigorous environmental regulations and reflects the industry’s dedication to diminishing vehicle weight and carbon emissions. Lignocellulosic fibers have surfaced as viable substitutes for synthetic fibers, attributable to their sustainability, biodegradability, and outstanding mechanical characteristics. This review article seeks to address the need to expand the research of lignocellulosic fibers for polymer composites. In addition to the widely recognized fibers, this review presents newly discovered or little-explored lignocellulosic fibers. In a similar manner, other than traditional characterization investigations, composite analyses such as acoustic absorption, fiber coating methodologies, machining processes, and vibrational assessments are also emphasized. Considering factors such as fiber variability, fiber hybridization, standardized processing methodologies, challenges and corresponding solutions, as well as the application of lignocellulosic fiber polymer matrix composites in the automotive sector, the sustainability and emerging trends of natural fibers have been thoroughly examined in the pursuit of sustainable material solutions. Furthermore, this review offers suggestions for scholars to further progress in the field of lignocellulosic fibers in automotive engineering.</p>