As Lee Iacocca's assistant general manager and chief engineer, Donald N. Frey was the head engineer for the T-5 project supervising the overall development of the car in a record 18 months while Iacocca himself championed the project as Ford Division general manager. The T-5 prototype was a two-seat, mid-mounted engine roadster. This vehicle employed a Taunus (Ford Germany) V4 engine and was very similar in appearance to the much later Pontiac Fiero.
It was claimed that the decision to abandon the two-seat design was in part due to the low sales experienced with the 2-seat 1955 Thunderbird. To broaden market appeal it was later remodeled as a four-seat car (with full space for the front bucket seats, as originally planned, and a rear bench seat with significantly less space than was common at the time). A "Fastback 2+2" model traded the conventional trunk space for increased interior volume as well as giving exterior lines similar to those of the second series of the Corvette Sting Ray and European sports cars such as the Jaguar E-Type.The "Fastback 2+2" was not available as a 1964½ model, but was first manufactured on August 18, 1964.
The new design was styled under the direction of Project Design Chief Joe Oros and his team of L. David Ash, Gale Halderman, and John Foster in Ford's Lincoln – Mercury Division design studios, which produced the winning design in an intramural design contest instigated by Iacocca.
Favorable publicity articles appeared in 2,600 newspapers the next morning, the day the car was "officially" revealed. A Mustang also appeared in the James Bond film Goldfinger in September 1964, the first time the car was used in a movie.
To cut down the development cost and achieve a suggested retail price of US$2,368, the Mustang was based heavily on familiar yet simple components, many of which were already in production for other Ford models. Many (if not most) of the interior, chassis, suspension, and drivetrain components were derived from those used on Ford's Falcon and Fairlane. This use of common components also shortened the learning curve for assembly and repair workers, while at the same time allowing dealers to pick up the Mustang without also having to spend massive amounts of money on spare parts inventories to support the new car line.
Original sales forecasts projected less than 100,000 units for the first year. This mark was surpassed in three months from rollout.Another 318,000 would be sold during the model year (a record),[28] and in its first eighteen months, more than one million Mustangs were built.[26] All of these were VIN-identified as 1965 models, but several changes were made at the traditional opening of the new model year (beginning August 1964), including the addition of back-up lights on some models, the introduction of alternators to replace generators, and an upgrade of the V8 engine from 260 cu in (4.3 l) to 289 cu in (4.7 l) displacement. In the case of at least some six-cylinder Mustangs fitted with the 101 hp (75 kW) 170 cu in (2.8 l) Falcon engine, the rush into production included some unusual quirks, such as a horn ring bearing the 'Ford Falcon' logo beneath a trim ring emblazoned with 'Ford Mustang.' These characteristics made enough difference to warrant designation of the 121,538 earlier ones as "1964½" model-year Mustangs, a distinction that has endured with purists.
All of the features added to the "1965" model were available as options or developmental modification to the "1964½" model, which in some cases led to "mix-and-match" confusion as surprised Ford exec hurriedly ramped up production by taking over lines originally intended for other car models' 1965 years. Some cars with 289 engines which were not given the chrome fender badges denoting the larger engine, and more than one car left the plant with cutouts for back-up lights but no lights nor the later wiring harness needed to operate them. While these would today be additional-value collectors' items, most of these oddities were corrected at the dealer level, sometimes only after buyers had noticed them.. The 1966 model was basically unchanged, but featured revised side scoops, as well as the deletion of the four bars protruding from the Mustang emblem in the grille. The Falcon-based instrument cluster was replaced with a sportier unit designed specially for the Mustang.
For 1967, the Mustang retained the original body structure but styling was refreshed, giving the Mustang a more massive look overall. Front and rear end styling was more pronounced, and the "twin cove" instrument panel offered a thicker crash pad, and larger gauges. Hardtop, fastback and convertible body styles continued as before. A host of Federal safety features were standard that year, including an energy-absorbing steering column and wheel, with thick center pad, 4-way emergency flashers, and softer interior knobs. For 1968, the 1967 body style continued, but with revised the side scoops. Side marker lights were also added that year, along with shoulder belts for front passengers on cars built after January 1, 1968. The 1968 model also introduced a new V8 engine, the 302. This small-block engine was designed for Federal emissions standards that were to take effect, and ended up being used in large number of other Ford cars for many decades.
In 1969, Mustang received an even larger body. While still popular, the original "pony car" was getting ever larger, and by 1973, many considered it bulky and clumsy, despite the avaialability of a big-block 429 cubic-inch V8.
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