Even before Ford Motor Company introduced the second generation of the Mustang in 1973, everybody knew that the car was going to get smaller.

The theme behind the previous redesigns were making the cars bigger. By 1973, that theme was dead. The Mustang needed to get smaller to be able to compete with the European and Japanese sports cars and that’s exactly what happened. The muscle phenomenon that was behind the introduction of models like Mustang Boss 429 was over.

In addition to the need to compete, Ford engineers needed to solve a whole variety of issues that had to deal with new emission standards imposed on the automotive industry by the government, and rising insurance premiums for young inexperienced drivers who, at the same time, loved powerful sporty cars.

Ford also witnessed and was very aware of the backlash it received from the market for turning the small 1955 Thunderbird into a giant overweight sedan.

Ford introduced all-new powertrains for 1974 models. There were no V8 engines available in 1974 models at all. The entry-level engine was an 88-horsepower 4-cylinder. Higher-level models had bigger V6 engines. The new Mustang was also almost 12 inches shorter than the original model.

The new car provided a very smooth, quiet and luxurious ride. Ford conducted an extensive market research on what customers wanted to see in the new car and offered a lot of new upgrades after listening to the customers. The car came with floor shifters, front disc brakes, and bucket seats as standard features.

At the same time, the look of the car stayed close to the original model with a long hood and short deck. One of the other goals of Ford Motor Company was to keep development and production costs as little as possible, which is why it used some of the components from the cheaper Ford Pinto in the new Mustang.