Ford Mustang (second Generation) - Background

Background

The first generation Mustangs grew in size; the 1973 model had become markedly larger than the original model. The pony car market segment saw decreasing sales in the early-1970s "with many buyers turning to lower-priced, fuel-efficient compacts like Ford's own Maverick - a huge first-year success itself." The Mustang was growing to become an intermediate-sized sedan, "too big and alienated many in its customer base." The allure of the original Mustang was its trim size and concept. The automakers in Detroit had "begun to receive vibrations from the only source it really listens to — new-car buyers... The message: Build smaller cars" as customers stopped buying and the inventory of unsold new cars climbed during the summer of 1973, and there were already positive market expectations for the new downsized Mustang. Automakers were "scrambling" by December 1973 as "the trend toward smaller, less extravagant cars to surge ahead faster than anyone had expected."

Subsequent to becoming president of Ford Motor Company on December 10, 1970, Lee Iacocca ordered the development of a smaller Mustang for 1974 introduction. Initial plans called for a downsized Mustang based on the compact Ford Maverick, similar in size and power to the Falcon, the basis for original Mustang. Those plans were later scrapped in favor of a smaller Mustang based on the subcompact Ford Pinto. The final product was "less of a Pinto than the '64½ had been a Falcon."

Rather than replicating the unchanged designs of the GM pony cars, Chevrolet Camaro and Pontiac Firebird, the Mustang II now competed against sporty subcombact models that included GM's Buick Skyhawk, Oldsmobile Starfire, and Chevrolet Monza. The new model would also better compete with 2+2 import coupes such as the Toyota Celica, Datsun 240Z, and the Ford Capri — which itself was inspired by the original Mustang but built by Ford of Europe, and marketed since April 1970 in the U.S. by Mercury as a captive import. The new design featured rack and pinion steering and a separate engine sub-frame that decreased noise, vibration, and harshness.

According to Ford's Chief Engineer, Stuart M. Frey (younger brother of Donald N. Frey) Iacocca expected a high level of fit and finish, wanting the car to be "a little jewel". The Mustang II production was 385,993 units the first year. The big 1973 Mustang total reached 134,867, but the 1974 version was within "10 percent of the original Mustang's 12-month production record of 418,812." Over five years the Mustang II recorded four of the ten top model year Mustang sales. A 2009 report confirmed Iacocca's vision for the 1974–1978 Mustang, saying it "was the right car at the right time, selling more than 1 million units in four years."

The marketplace adjusted to the oil embargo, increasing insurance rates, United States emissions and safety standards, and downturns in the economy, and waning consumer demand in the pony car segment. GM had considered discontinuing the Camaro and Firebird after 1972, and in 1974 Chrysler discontinued the Barracuda and Dodge Challenger, American Motors discontinued the Javelin, and lighter, more economical imported cars became increasingly popular — "in effect, filling the segment the Mustang had created, then abandoned."