How Ford’s iconic Mustang came to be... and almost didn’t

1965 Ford Mustang

November 1960 was a truly momentous month for America. On November 1, President Eisenhower said that the U.S. would “take whatever steps [were] necessary” to defend the Guantanamo Naval Base in Cuba. On November 3, Explorer 8 was launched to study the Earth’s ionosphere. On November 4, filming wrapped on the movie that would be both Clark Gable’s and Marilyn Monroe’s last, The Misfits. On November 8, Democrat Senator John F. Kennedy narrowly beat Republican Vice President Richard M. Nixon for the U.S. presidency. And on November 10, Lee Iacocca was named vice president and general manager of Ford Motor Company’s Ford Division.

Armed with a degree in industrial engineering from Lehigh University, Iacocca initially joined Ford Engineering in August 1946, soon moved to the sales and marketing department, and raced up that ladder to leadership of the Ford brand—which had just launched its first compact car, the Falcon—at the tender age of 36. 

“We approached the decade of the ’60s at Ford with a rather stodgy, non-youth image,” Iacocca would later tell us. And when he walked out of Henry Ford’s office after learning of his big promotion, his mind’s eye was fixed on a stylish, youthful car. 

“John Kennedy was president, and the country was taken by the enthusiasm of that youthful leader,” recalled Hal Sperlich, who had just been promoted to special studies manager in Ford Division’s product planning group. “The excitement, the promise… everything was upbeat and youthful at the time. Iacocca was a vibrant kind of guy, a go-go type who wanted to make his mark, and he seemed to fit all of that. It was one of those wild times when the chemistry of the people was right, and the times were right.”

A special market test showed such strong potential demand for an affordable, high-style car that the question became not whether to build one, but how quickly it could be done. 

“It was the 18–24 group—the accumulators, the career starters, the trendsetters—that we wanted to get to,” Iacocca said. “We had to get into their minds even if they couldn’t afford it at first. Hell, we’d hit on such a good thing that we had to get moving on it before somebody else could come along and beat us to it.” Encouraging 1960 fall sales figures confirmed the positive market trend and strengthened Iacocca’s resolve. 

The pony-car plan gets moving

1964 Ford Falcon
Mecum
1964 Ford Falcon

The initial intent was a much sportier version of the Falcon. The Falcon’s powertrain and suspension components were strengthened to accommodate Ford’s new 221-cubic-inch “Fairlane” small-block V-8, and other pieces from the new, midsize Fairlane would be available if needed. The Falcon substantially outsold its Chevrolet Corvair and Plymouth Valiant rivals and set an industry first-year record. However, “It just was out of character,” product planner Dick Place exclaimed.  “Falcon was not a sporty car and couldn’t be made into one. Doing that was like putting falsies on grandma.” 

Meanwhile, Chevrolet had significantly boosted the appeal of its rear-engined Corvair by introducing a sporty Monza version of it for 1961. And when Iacocca told Ford styling chief Gene Bordinat to line up every available Ford car opposite its Chevrolet counterpart for comparison, there was a void right where he knew it would be—opposite the Corvair Monza.

“We had some pretty good hunks of hardware,” Iacocca said, “but we didn’t have the wrappers to put them in. Everybody was Thunderbird nuts at that time, and I felt we should have a poor man’s T-bird.”

In a series of offsite meetings at Dearborn’s Fairlane Hotel, Iacocca’s “Fairlane Committee” established key criteria for the car it had in mind: no more than 180 inches, 2500 pounds, or $2500; a short-deck low profile and T-Bird-style long hood. It would carry four people, offer six-cylinder and V-8 engines, and would be adaptable to a variety of tastes. “Working with Styling, we started putting together different ways to approach it,” Sperlich said, “including alternatives that involved some skin change on the Falcon. But we finally decided we needed a whole new skin.”

Obstacles aplenty

1965 Ford Mustang front 3/4 at the beach
Gabe Augustine

Early in 1962 Bordinat showed some of these small, sporty car designs to Henry Ford. “He was cold toward the whole idea, and we couldn’t understand it because he’s a car buff. But he wasn’t having any part of it,” Bordinat related. “In fact, he said, ‘I’m leaving,’ and he walked out of the meeting. I had never seen him so cold to a car. It turned out that he went straight to Ford Hospital and spent the next few months there with mononucleosis. He wasn’t interested in anything that day because he was feeling terrible.”

And when the idea was first presented as a formal “blue letter” program proposal, it was soundly rejected. “There was not much top management interest,” said product planning manager Don Frey, “and not much interest even from Styling.” 

“But once the seating package was fairly well set,” Sperlich told us, “a ton of work was done trying to get a design that made sense, with one failure after another. Until, finally, Lee called for a competition.”

Iacocca gave Bordinat two weeks to create a half-dozen models, and his Ford, Lincoln-Mercury, and Advanced studios enthusiastically turned out two apiece. Four of them were too rounded (“soft”), too straight-edged (“sheer”), or too heavy-looking. Two stood out. Iacocca’s favorite was the Ford studio’s sleek “Stiletto,” but it would have been too expensive to build. So the “Cougar” model submitted by Dave Ash, assistant to Ford studio chief Joe Oros, which had the most T-Bird and Lincoln Mark II character in its roofline and profile, ended up the preferred choice. 

And, as it turned out, it previewed almost exactly the production Mustang

“We were on our second or third blue letter proposal to management,” Frey recalled, “and it still was not approved. Then Lee went back to Mr. Ford and got him to look at it again, and he agreed to bring it to a corporate product approval meeting and gave his own tentative approval… sort of: ‘Okay, I’ll approve the damned thing just to get you guys off my back.’”

Iacocca had three strikes against him when he went in to sell this program on September 10, 1962. 

First, Ford’s conservative and cost-conscious top leaders did not yet see the need to invest in the “youth market” that was only just beginning to emerge. Second, they were wary of any new-car program after the very costly and embarrassing failure of the 1958–60 Edsel (which had also surveyed very well). Third, a large amount of money ($250 million) was already earmarked to retool the regular Ford line for 1965. 

Yet, somehow, sell it he did.

“There was a lot of cost work done on it,” Sperlich later related, “and a lot of hard selling, because we had to sell it to a management that didn’t understand it and didn’t want to do it. The initial planning volume was 75,000 units, and that’s where the program was finally sold.” 

Off to the races

Lee Iacocca
Ford
Lee Iacocca unveiling the Mustang

When Iacocca walked out of that meeting with a reluctant corporate blessing and a modest $40 million with which to design, engineer, tool, and develop his small sports car, he remarked that he had never been through such a tough selling job in his life—a significant comment from a man who had risen through the very tough ranks of Ford sales organization.

The Mustang was scheduled to be built at Ford’s Dearborn plant with “Job One” on March 9, 1964—just 18 months at a time when new car programs typically took twice that long to move from approval to production. Public introduction was slated for five weeks later. And, as we all know, the Mustang would set all-time industry records with 303,408 units built in calendar year 1964, followed by two straight years of 580,000-plus.

Lee Iacocca’s long, distinguished career would see other major successes and some failures. But that iconic first Mustang is one by which Iacocca would be forever remembered.