Mahindra is developing an all-new engine family that will power its future range of compact SUVs and passenger cars. It is rumored to be investing around USD 800 million (around Rs 4,300) crore in this project. 

The new engine family is likely to include three petrol and three diesel engines with capacities ranging from 1.2 to 1.6 litres. Developed  on a modular architecture, the base 1.2-litre motors will be three cylinder units, while the higher capacity 1.5 and 1.6-litre engines will have four cylinders.

However to optmise costs, all engines will use common parts and have a common 'bore center spacing' to optimise manufacturing costs. An all-new five and six-speed transmission is also being developed along with a trans-axle to drive the transverse engines. 

The new engine family is being developed for Euro VI application and beyond and will power a range of future compact models from Mahindra and SsangYong. While the engine development is cooperation between Mahindra and its Korean affiliate, it's the parent company that will take the lead in this ambitious programme. Hence, the bulk of the engine development will be carried out in the Mahindra Research Valley (MRV), the company's state-of-the-art R&D facility outside Chennai. Engine specialists AVL of Austria are believed to be consultants for this project.

For the Indian market, the 1.5 diesel is likely to be the mainstay of the new engine family and this mootor, rumoured to develop upwards of 110bhp, will power Mahindra's new range of compact SUVs (Codename: S101/2) It's likely that the Mahindra Verito will eventually ditch Renault's K9K diesel motor and use an in-house diesel motor to enhance the Verito's value proposition. 

Mahindra's new engine range is likley to go into production in late 2014 or 2015 after fresh capacity is built up. 

The higher-capacity mHawk engine will continue to power larger products like the Scorpio, Xylo and the XUV500, but the older 2.5 CRDe engine (badged as mEagle) is likely to be discontinued.

"Our high-end products will eventually be only powered by the mHawk and its derivatives." said a company source.