Mahindra engines will soon become the heart of the Ford Ecosport

The 2018 Ford Ecosport is displayed during the North American International Auto Show in Detroit, Michigan, U.S., January 10, 2017. REUTERS/Mark Blinch - RTX2YDO8

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Ford's mini sports utility vehicle Ecosport could sport a Mahindra & Mahindra-manufactured engine when a new version of the SUV debuts sometime in the next few quarters.

A senior official at M&M confirmed that a new small capacity petrol engine developed by the company will debut on the Ecosport, as well as the upcoming Ssangyong Tivoli-based Mahindra SUV, which will hit the market in the final quarter of this year.

"The S201 will have both petrol and diesel engine options. The petrol engine of S201 will also be shared with the Ecosport made by Ford. Both engines will be BS-VI compliant," said Pawan Goenka, Managing Director, Mahindra & Mahindra.

Mahindra's Ssangyong Tivoli-based vehicle is codenamed S201.

Sharing the engine for the Ecosport is part of a broader agreement between Mahindra and Ford to share powertrains (engine and transmission) that meet next generation emission norms, both in India and abroad.

The two companies are also working on two new SUVs, the first of which will hit the market in 2021. Ford will use a Mahindra platform for a making a 'C-SUV', the size of a Mahindra Scorpio, and will debut more than two years from now.

M&M and Ford are exploring possibilities for a smaller 'B-SUV' that will be the size of the Maruti Suzuki Vitara Brezza, which is the bestseller in its segment.

To be sure, Ford does have its own petrol engines. Only last year, the company unveiled an all-new 1.5 litre, 3-cylinder petrol engine that was subsequently introduced in the new EcoSport.

The American car maker also has a 1.0-litre petrol engine branded as Ecoboost, but this engine won't be upgraded to comply with BS-VI norms, which will kick in April 1, 2020.

Supply of petrol engines will be a big upgrade for M&M as the Mumbai-based company has always been a diesel engine manufacturer. Only two years ago it debuted an all-new product with a petrol engine that was largely developed in-house by the company.

Upgrading Bharat Stage-IV (BS-IV) engines to BS-VI level is proving to be a costly affair for all manufacturers. To keep costs low, some companies are going in for sharing of engines.

Thus far, Tata Motors has signed a deal to source a new BS-VI ready 2.0 litre diesel engine from Fiat Chrysler Automobiles India (FCA) for its upcoming SUV Harrier.

Similarly, FCA will also supply the same engine to SAIC-backed MG Motors India. Ford will be able to keep costs low by outsourcing the engine development process to M&M.