Hybrid natural fiber composites have emerged as promising sustainable alternatives to synthetic materials in the automotive industry, particularly for interior applications. By combining natural fibers such as flax, jute, hemp, or kenaf with synthetic fibers or polymer matrices like polypropylene (PP), these composites offer a balanced performance profile, including lightweight properties, improved acoustic insulation, a reduced environmental footprint, and cost efficiency. This review offers a comprehensive analysis of the materials, manufacturing techniques, properties, and industrial trends related to hybrid natural fiber composites in automotive interiors. Key fabrication methods such as compression molding, injection molding, and thermoforming are discussed, alongside surface treatments like alkali, silane, and maleic anhydride grafting, which enhance interfacial bonding and durability. Applications in door panels, dashboards, seatbacks, and trims are explored through case studies from leading OEMs, including Ford, BMW, and Toyota. Challenges, including moisture sensitivity, recyclability, quality variability, and compliance with safety standards, are critically examined. The study also highlights advancements in smart composites, nanofillers, and AI-assisted material optimization. Moreover, life cycle assessment (LCA) insights reveal the environmental advantages of these materials over conventional composites. The review concludes with a gap analysis and outlook emphasizing the need for standardized testing, durable bio-based matrices, scalable recycling solutions, and multifunctional integration.