How Lee Iacocca and Carroll Shelby changed Detroit

The recently departed Lee Iacocca is best known for his role in bringing Chrysler back from the brink of financial ruin. Car enthusiasts also know him as the father of the Mustang. Though it could be argued that the Mustang wasn’t entirely his original idea, and though he had little direct role in its design or engineering (Iacocca was an engineer by training but a salesman by nature and career), Iacocca championed and shepherded the first pony car, understanding that the Baby Boomers reaching driving age wanted something with a youthful image.

Less well known is the role Iacocca played in the creation of another significant automobile, the Shelby Cobra, and his very fruitful relationship with Carroll Shelby, which would go on to yield four consecutive Le Mans victories.

The men first met in Iacocca’s Dearborn office in the spring of 1962. Ford’s head engineer, Donald Frey, set up the meeting.

In 1962, Iacocca was a rising star in Detroit. Two years later, the Mustang would put him on the cover of Time magazine. Two years earlier, Henry Ford II had elevated Iacocca, then in charge of marketing for Ford cars and trucks, to head the entire Ford division. Ford was embracing Total Performance as a slogan and Iacocca was going to be in charge of that.

Lee Iacocca in 1978
Lee Iacocca FCA

Iacocca’s star may have been rising, but just about nobody in the executive suites of the domestic automakers knew who Carroll Shelby was. Maybe a handful who raced sports cars at suburban Detroit’s Waterford Hills road course knew that the lanky Texan was a champion driver, having won at Le Mans in an Aston Martin. Perhaps some even knew that Shelby had turned down a factory ride offered by Enzo Ferrari himself, but Iacocca was never a racer. In any case, heart trouble had ended Shelby’s racing career, and at 37, he needed some way to make a living.

Shelby and another racer, Ed Hugus, who had a Pittsburgh import business called European Cars, had discussed putting an American V-8 in a British roadster. Ford was just coming out with the new, relatively lightweight small-block V-8 engine. It was later to become famous as the 289 Windsor, but the original motor had just 221 cubic inches of displacement, soon increased to 260.

Hunus had connections with the UK’s AC Cars, which made the Ace sports car. The Ace was then, and is now, a beautiful car. John Tojeiro’s design is not entirely original, as its lines owe much to theCisitalia 202 by way of the Ferrari 166MM Barchetta, but the proportions and muscular body are just perfect, particularly without the steroidal enhancements of the 427 Cobra.

AC needed the business. Its cars may have been beautiful but they were mechanically obsolete. Also, it was losing Bristol as an engine supplier. AC was being kept afloat by a contract with the British government to produce invalid carriages, motorized three-wheelers for transporting wheelchair-bound folks.

Carroll Shelby
Carroll Shelby Ford

Shelby wasn’t the first person to think of marrying an English chassis to American power. Sydney Allard put flathead Ford and Mercury V-8s in his J2, and Donald Healey originally wanted to use Cadillac’s modern, high-compression engine in his sports cars, but Cadillac didn’t need his business. Instead, Healey made a deal with George Mason for Nash drivetrains, resulting in the Nash Healey sports cars.

A handshake deal was struck between Shelby, who had no money to speak of, and Hugus, who provided initial financing for the first cars AC sent over, and whose shop in Pittsburgh completed the installation of the new small-block 260-cid V-8s and Ford transmissions, which Hugus also financed. Shelby agreed to reimburse Hugus if and when Ford officially got on board with the project.

As mentioned, the AC Ace, with its transverse leaf suspensions, was obsolete by the time Shelby started tinkering with it, but as Ford’s own engineers would later find out when they tried to improve it with modern bits, in Cobra form it was very fast, obsolete or not. Shelby figured that if he could get a couple of Cobras built and racing, he might be able to make a big enough splash and generate enough publicity for Ford that the automaker would financially underpin Shelby American and sell its products through its massive dealer network.

Hugus wasn’t particularly interested in becoming an automobile manufacturer, and Shelby needed Ford’s backing if he was going to start building Cobras himself in California. Hence, the spring 1962 meeting in Iacocca’s office.

The men shook hands and sized each other up, two alpha males from tough backgrounds. Iacocca may have been wearing an expensive tailored suit, but he grew up as a poor Italian kid in a steel town, Allentown, Pennsylvania, making it to Lehigh and then Princeton. With his black cowboy hat, Carroll Shelby affected the manner of a Texas oil tycoon, but when he went to make a deal with Ford, he had an unprofitable Goodyear racing tire distributorship, an ex-wife, three kids to support, and a failed chicken farm.

First impressions were favorable. Iacocca would later recall thinking Shelby was “a good lookin’ son of a bitch.” Shelby proceeded to pitch the idea of a Ford V-8 in a British sports car that he could make competitive for what Detroit automakers considered pocket change. The British made great sports cars, with relatively weak and unreliable engines. A powerful and trustworthy American V-8 in a fun-to-drive English roadster was a good idea.

Lee Iacocca unveils the Minivan in 1983

“The idea is staring American car manufacturers in the face,” Shelby told Iacocca. “With $25,000, I can build two cars that’ll blow off the Corvettes.”

Shelby had said the magic word. Though Ford was promoting Total Performance, the Chevy Corvette was then the king of the road, and American race tracks, as well. Iacocca knew that nothing would give Ford more performance credibility in America than beating Corvettes on the track.

As a salesman himself, Iacocca appreciated Shelby’s hard sell. He told Frey, “Give him the money and get him out of here… before he bites somebody.”

Just 90 days later, Shelby delivered the first Cobra to Ford in Dearborn for evaluation. The following spring, after the suits in Dearborn (and their counterparts crosstown at the General Motors Building) started receiving reports of the Ford-powered Cobra dominating the Corvette in Sports Car Club of America events, Lee Iacocca didn’t have to explain to anyone in Detroit who Carroll Shelby was.

The relationship between the two men continued for decades, later resulting in some very cool high-performance Dodges when Iacocca ran Chrysler, such as the V-10 powered Viper. That’s another story, though.

Suffice it to say that the automotive world is a better place for that relationship.

[Source: Go Like Hell by A.J. Baime, Mariner Books 2010]


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    Thank you for posting this. I had no idea.. so, when it was Ford v. Ferrari, Iaccoca should have been featured too?

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