Ford Mustang (second generation)

The second-generation Ford Mustang, marketed as the Ford Mustang II, is a pony car which was manufactured and marketed by Ford from 1973 until 1978. It has a front-engine, rear-wheel-drive layout with seating for four passengers and either a two-door coupé or three-door hatchback body. Introduced in September 1973 for the 1974 model year, the Mustang II arrived roughly coincident with the oil embargo of 1973 and subsequent fuel shortages. Developed under Lee Iacocca, it was an "entirely new kind of pony car." Ford "decided to call it Mustang II, since it was a new type of pony car designed for an era of high gas prices and fuel shortages."

The Mustang II was 490 lb (222 kg) lighter and almost 19 in (483 mm) shorter than the 1973 Mustang, and derived from the subcompact Pinto platform. While sharing a limited number of driveline components with the Pinto, the Mustang II employed an exclusive subframe, isolating its front suspension and engine mount subframe. The steering used a rack-and-pinion design.

Named Motor Trend's 1974 Car of the Year and reaching over 1.1 million sales over four years of production, the Mustang II is noted simultaneously for both its marketing prescience and strong sales – while criticized as having abandoned essential aspects of the Mustang heritage and described, in a retrospective after 40 years since its introduction, as embodying the Malaise era.

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 Ford Maverick – a huge first-year success itself." The Mustang was growing to become an intermediate-sized sedan, which "was 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."

After 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 the original Mustang. Those plans were subsequently scrapped in favor of a smaller Mustang based on the subcompact Ford Pinto, which had been introduced in 1971.

Rather than competing against GM's larger pony cars, Chevrolet Camaro and Pontiac Firebird, the Mustang II now competed against sporty subcompact models, including GM's Buick Skyhawk, Oldsmobile Starfire, Pontiac Sunbird, and Chevrolet Monza. The new model competed also with 2+2 import coupes such as the Toyota Celica, Datsun 240Z, Mazda RX-3, and the European 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. It saw a new competitor from Germany in 1974 with the Volkswagen Scirocco, and the BMW 2002 introduced earlier in the late 1960s.

The new design featured rack and pinion steering and a separate engine sub-frame to decrease 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". Mustang II production reached 385,993 the first year. Where its predecessor's production, the 1973 Mustang, had reached 134,867, the 1974 model reached 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 II, saying it "was the right car at the right time, selling more than 1 million units in four years."