Bob Fria
March 24, 2014
Photos By: Ford Archives

The dawning of the compact car revolution in Detroit began in 1960 with the Big Three manufacturers' simultaneous introduction of their first attempt at a small car. General Motors introduced the Chevrolet Corvair, Chrysler debuted the Plymouth Valiant, and Ford's entry was the Falcon. It was a time of conservatism and the buying public was clamoring for something new for their transportation needs as opposed to big behemoth vehicles.

For Ford, the Falcon was a resounding success, outselling both the Corvair and Valiant. The brainchild of Ford Division assistant general manager Robert S. McNamara, the Falcon was designed as an inexpensive small car for the masses and aimed squarely at the conventional buyer. Over 400,000 were sold in the first year. But its design was box-like, with no frills and few options. It was developed to compete with the Volkswagen "Bug" at a time when Americans were starting to add a second, smaller car to their driveways.

McNamara became President of Ford Motor Company but quickly departed in late 1960 to become Secretary of Defense for newly-elected President John F. Kennedy. However, his brilliant ideas left Ford profitable but with a conservative car line, including the successful but bland Falcon. Lee Iacocca was immediately appointed Ford Division President to fill the McNamara departure. He was a visionary with an idea for a new compact four-seat car, one with sportier styling to appeal to the baby-boomers who were just coming of driving age.

Iacocca noted, "Ford began the 1960s with a rather stodgy, non-youth image." It was time for fresh ideas to renew the company in the upbeat marketplace emerging in the early 1960s.

Shortly after taking his new position in late 1960, Iacocca formed a secret committee of Ford managers to investigate the emerging baby-boomer marketplace. If there was a market for his vision of a new sporty car, as he suspected, he would act on his plan to formulate a new kind of car from Ford. He knew there would be difficulty in gaining acceptance from his boss, Henry Ford II, who was still healing from the $250,000,000 loss on the unsuccessful Edsel car just two years earlier. It wouldn't be an easy sell for Iacocca. But Henry hadn't yet experienced Iacocca perseverance.

The Mustang I two-seater concept car debuted at the U.S. Grand Prix at Watkins Glen in October 1962. It was a running vehicle, as proven by driver Dan Gurney who reached 100 mph on the Watkins Glen road course.

Working nights and weekends over 14 weeks, Iacocca's Fairlane Committee, as it became known because the group met at Dearborn's Fairlane Inn, would outline strict requirements to serve as the blueprint for the design of the new yet-to-be-named car. A young Hal Sperlich developed a plan for keeping production costs low by utilizing the existing Falcon platform for the new car. The baby-boomer demographic was identified by the committee and a perceived strong interest by the group in a new four-seat sports car was envisioned.

Iacocca needed proof that a new sporty car from Ford would satisfy this new young-at-heart demand, so he had a one-of-a-kind two-seat concept model built to test appeal. Officially named "Ford's Experimental Sports Car, the Mustang" but later known as the '62 Mustang I, the concept was powered by a 1500cc V-4 front-wheel-drive engine with 109 horsepower. It took only 100 days to design and build the running concept. Driven in mid-October 1962 by race driver Dan Gurney at Watkins Glen Raceway, the Mustang I concept exceeded 100 mph. But more importantly, it dazzled the crowd and made headlines in the automotive press when demonstrated as a teaser to the Gran Prix race. The car proved to Iacocca that the car buying public was ready for a Ford sporty car.

This photo, taken on August 16, 1962, shows the original clay model that was chosen to become the ’65 Mustang. At the time, it carried “Cougar” identification, a favored name by designers Dave Ash and Joe Oros, along with a placard describing it as the “Falcon Allegro.”

At the same time, styling department work had already commenced on the new four-seat car. After numerous attempts to design a car that would satisfy all Fairlane Committee requirements, the final proposed full-sized clay model was presented to Henry Ford II. On September 10, 1962—a month before the Mustang I two-seater appeared at Watkins Glen—Henry Ford II signed off on the creation of a new four-seat sporty model for Ford. At the time, it was code-named Cougar.

By the spring of 1963, the final four-seat plans were coming to fruition. But Iacocca needed one more public perception test to make sure he was on the mark. In late spring, he directed that an early prototype four-seat car be converted and camouflaged into a concept to be shown again at the Grand Prix race at Watkins Glen in October, exactly one year after the Mustang I's debut. This concept, fashioned by Dearborn Steel Tubing Company, was created from a hardtop prototype by removing the steel roof for conversion into a convertible. It was powered by the new 271-horsepower 289 High Performance V-8 with a manual four speed transmission. The public loved the car. It was immediately shown on national TV and in automotive publications. Of course, the public didn't know that the car was actually a disguised version of the approved four-seat car already accepted for production. Iacocca had the proof he was looking for—hearty acceptance for a new Ford four-seat sporty car. With Fairlane Committee research confirmed, he knew the new car would be an instant success.

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Hal Sperlich, who had suggested using the Falcon chassis to hold down development costs, was rewarded when he was named program manager for the new project.

The design process for the new car, by then re-named the T-5 project, was the same Ford had used for many years after World War II. First came completion of clay and fiberglass concept vehicles, then Kirksite metal stamped prototype vehicles, and then on to hand-assembled pilot plant cars before the start of formal Mustang production at the Dearborn Assembly Plant.