Mustang: Previously secret documents and photos reveal the design to driveway story!
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Mustang: Previously secret documents and photos reveal the design to driveway story!

By Retroautos - 28 September 2021

Ford recently released secret documents and photos which reveal many new insights as the Mustang went from design to driveway.

On December 5th, 1962, Ford’s vice president and general manager, Lee Iacocca, signed an internal company document known as a Blue Letter Plan.

With hindsight it is one of the most important documents Iacocca signed in his long career, because his Blue Letter Plan sought formal approval for the Mustang.

Within Ford, a Blue Letter Plan was a comprehensive proposal to the all-powerful Operating Policy Committee, chaired by Henry Ford II (HFII), which approved or rejected all vehicle projects for production.

Iacocca’s previously secret Mustang Blue Letter Plan was among a number of documents and many never before published images of styling proposals which have been locked away in Ford’s files for almost 60 years.

Mustang in the corral. Copyright Ford Media 2021

Although the story of the Mustang’s development is well known, to read the Blue Letter Plan, and the other documents, is to be “in the room” with Ford’s top decision makers when they discussed and approved the Mustang in a series of committees, culminating in an Operating Policy Committee meeting on 11th December, 1962.

For Iaccoca, barely 38 years old, this Blue Letter Plan was the culmination of 12 months’ work to persuade HFII that the company needed a smallish personal sporty car to compete in the emerging “youth market”, specifically against Chevrolet’s 1962 Corvair Monza sports coupe and convertible, which Iacocca knew was selling well.

By the end of 1963 Chevrolet had sold 403,000 Monza coupes, with 152,000 in 1962 alone. No wonder Iacocca could see a growing market for an affordable four-seater sporty car. Copyright GM Media 2021.

Trouble was, talk of a new car was discouraged at Ford. Too much money had been spent on a failed car that had carried the name of HFII’s revered father, Edsel. HFII believed his father’s reputation, and his, had been tarnished by the failure and was very reluctant to consider any expansion into new market segments.

Indeed, Iacocca had used this very reason to convince HFII that an innovative front wheel drive small car with a new V4 engine, called the Cardinal, which was planned to slot under the Falcon, would not sell in the USA.

Monza coupe and convertible sales totalled a massive 464,000 by the end of 1963. Copyright GM Media 2021.

Iacocca wrote in his autobiography, Iaccoca, that he told HFII “the Cardinal is a loser.” He added that “we simply can’t afford a new model that won’t appeal to younger buyers.” To recoup the investment already made in its development the Cardinal was allocated to Ford in Germany where it appeared as the 1962 Taunus P4.

A few paragraphs later Iacocca wrote that “with the Cardinal out of the way I was free to work on my own projects.” And one of those new projects was given the code name T-5 Special Falcon.

The front wheel drive 1962 Taunus P4 was planned for the USA. Iacocca’s veto of the car was a smart move because the front wheel drive system and V4 engine were not fully sorted. There is a high likelihood that Iacocca’s decision to reject the Taunus originated with the Fairlane Committee. It met in the upstairs conference room of the Fairlane Inn, overlooking the pool. Copyright Ford Media 2021.

In 1961 Iaccoca and a select group of his key managers, including Hal Sperlich (Product Planning) and Don Frey (Engineering and Product Planning), formed the now legendary Fairlane Committee to work on the Special Falcon.

Two styling proposals from November 1961 reflecting initial ideas for an inexpensive two-seater.

They met in the conference room at the Fairlane Inn motel. It was located at 21430 Michigan Ave, close by Ford’s headquarters but far enough away to avoid being spotted by those who might wonder what was happening. The Inn was demolished in 2005 and when I last drove by it in 2019 the land was a vacant lot covered by neatly mown grass.

This design theme, dated May 1962, was based on the 1962 Allegro show car. You can read more about the Allegro in the a previous Retroautos featuring Ford’s concept cars of the early 1960s.

The Fairlane Committee agreed on the basic parameters of the car, that it would use the Falcon as its base and be launched in April 1964. Agreement about its shape, however, proved more problematic. Styling had started in November 1961 and nine months later, despite 18 different clay models being developed, no one had been able to satisfy Iacocca’s vision. As he wrote in his book “none of them seemed exactly right.”

Styling the Mustang

Another variation of the Allegro from the Advanced studio, showing Allegro badges. It was one of the designs shown at the 16th August display.

The secret documents highlight the disquiet at the length of time it was taking to finalise the styling. A September 1962 memo, headed “T5 Styling Notes”, summarises a month-by-month list of rejected ideas proposed by the Ford, Lincoln-Mercury and Advanced styling studios. One comment, dated 26th March, noted that an “alternative roof (was) reviewed and rejected.” On 29th May the shapes were considered “not sporty enough”.

Looking like a cross between the 1961-63 and 1964-66 Thunderbird, this is another proposal from the Advanced studio. It was called Stilletto.

The entry for 31st July, 1962 tersely conveys the sense of frustration, which is not surprising because the release date was just 20 months away.

“Styling Office asked to start again.”

It was at this point that Iacocca demanded that any proposal not so far rejected be displayed together so a final decision could be made. Seven new models were also created. The date chosen was 16th August.

No badges on this Allegro themed car. The round tail lights were quickly losing favour with Ford’s stylists, having been in use since the early 1950s.

It is now automotive legend that a late and rushed entry from the Ford design studio was selected. It was developed from a sketch by Gale Halderman, which he did one night at home. The model was two sided. Both designs were very similar. The right side was shaped by Joe Oros and the left side by Halderman. Another designer, David Ash, also contributed. Elements of both sides were combined for the production car.

The T5 Styling Notes concluded that:

“There was finally, after considerable time, an adequate number of alternative styling themes for a conscious choice, on the part of the Division, for recommendation to the Styling Committee.”

Badged Cougar, this two-sided proposal from the Lincoln-Mercury stylists features eye catching “flying buttress” roof panels.

In the midst of this quest to find the right shape, Iacocca also had to deal with an outside proposal from the Budd Company, which had gained some support within Ford. The Budd Company was a builder of steel bodies for automobile, train and military vehicles around the world. It had a particular expertise with unitary construction and its technology was used by Citroen in the mid-30s in the manufacturing of the Traction Avant. Their idea was a restyled two-seater Thunderbird, coded XT-Bird.

In another of the secret memos, dated 23rd May, 1962, the product planning department rebuffed the Budd proposal, emphasising that the Ford division:

“Does not believe it would need both the XT-Bird and the Special Falcon. The Division also expects that the Special Falcon would achieve significantly higher volume than the XT-Bird and could be sold at a lower price.”

Later in 1962, Budd proposed a similar idea to American Motors, calling it the XR 400. The one off 2+2 convertible was built using Rambler American underpinnings. AMC declined the offer. In 1997 Budd sold the XR 400 to the Henry Ford Museum.

The Budd Company’s XR-400 convertible, pictured outside the Henry Ford Museum. It appears old fashioned compared with yet another the stylish Allegro based proposal. This design tested well with market research focus groups and was seriously considered.

As happens in a large global organisation, Iacocca had to seek multiple approvals for the Special Falcon through a series of committees and obtain sign off from senior finance executives.

The preliminary financials were outlined in a memo dated 24th July, 1962, to Arjay Miller, Ed Lundy and Fred Secrest. Approval from these key executives was an important achievement, because without their support it would be difficult to convince HFII. Miller was on his way to the presidency of Ford and Lundy would soon become the chief financial officer. Both were part of the original “Whiz Kids” management group, hired by HFII, to help him rescue Ford from bankruptcy in the late 1940s. Secrest was the vice-president controller, the day-to-day boss of finance. The financials were accepted.

This proposal is also badged as an Allegro. It is based on the Mustang I concept car, and the styling suggested its rear engine configuration. The Mustang I is showcased in my story about Ford’s early sixties concept cars.

Next came the Product Strategy Committee. In a concise presentation made on 31st July, 1962, Iacocca told this Committee that:

“Chevrolet has opened up a new market segment with the Monza. This action is believed to be partly responsible for our relatively poor sales position. After extended study, the Ford Division has concluded the Monza requires more direct counteraction than we can provide with Falcon. We believe this can be done profitably with a compact sporty car derived from the Falcon.”

The submission acknowledged that the final financials and styling had yet to be resolved, but by early September all would be in place.

After the 16th August decision which agreed the overall shape, an update on the project was submitted to the Operating Policy Committee on 10th September, 1962. At this meeting Iacocca made it clear that if no decision was made, the launch of the Special Falcon would be delayed.

“Body Engineering has informed us that they can undertake the program if they schedule it ahead of the heavy 1965 workload. If this is not done, the Special Falcon Program would probably have to be deferred to 1965 or 1966.”

Iacocca also established a time line for subsequent reports and noted that the project was still able to be cancelled if the financials made it unfeasible:

“It is planned to present this program to the Operating Policy Committee on November 19, 1962 with interim status reports on October 1, and November 1 (to the Product Strategy Committee).

In this manner, the program can be terminated at any point prior to November 19, 1962 if, during the course of developing firm financial data, the program should be determined to be undesirable.”

At this 10th September meeting HFII gave his qualified agreement to the project, subject to more financial details. Subsequently, the final decision was pushed back to 11th December.

Pulling back from the flamboyant flying buttress model, the Lincoln-Mercury studios also proposed this more restrained design. The front bumper bar surrounds the grille and is similar to the Lincoln-Mercury Stiletto proposal.

Iacocca and his team would have been very busy in the lead up to the December meeting. Not only did they have to compile the Blue Letter Plan, they also had to deliver the status reports to the Product Strategy Committee. They would have spoken with the committee members many times. They’d have advocated their proposal, answered questions, reassured them of other committees’ approvals, invited them to see the styling proposals and made modifications to ensure their support.

At the same time, the styling and engineering departments were working on seating bucks, trim and interior design and developing the convertible model. When HFII wanted two inches more back seat leg room, he got it.

The October Product Strategy Committee meeting approved the convertible model and at its November meeting the overall package was approved.

This is a two-sided model. Note how the dual exhaust pipes exit through the panel under the bumper bars. 

Although Iacocca would have been reasonably confident that he had the support of all committee members before the Blue Letter Plan was circulated, there was still a possibility that some external or internal event might cause the Committee to delay or reject the proposal.

So, the Plan had to be perfect and convincing, as did Iacocca’s presentation on the day. Hal Sperlich was given the task crafting the narrative with input from the Fairlane Committee.

Halderman wrote of Sperlich’s key contribution to the Plan in his autobiography Mustang by Design: “Were it not for Sperlich’s efforts in writing the perfect Blue Letter Plan the Mustang would have never gotten made.” According to Halderman it “won over Mr Ford.”

The badging on this proposal was Allegro-8.

So, what did this Blue Letter Plan actually say? Had you been a member the Operating Policy Committee here’s a selection of the styling, marketing, sales, technical and financial reasons, contained in the 32-page document, you would have been asked to approve. Photos of the T5 Special Falcon were attached as were diagrams and a long list of the components and specifications shared with the Falcon. Price and dimension comparisons with the Monza, Falcon, Chevy II/Nova, Fairlane, Pontiac Tempest, Buick Special and Oldsmobile F85 were also included.

Another Allegro from the Advanced studio.

The Blue Letter Plan began with a short summary of the Special Falcon project to date, noting that approvals from all relevant committees had been obtained:

“For some months the Ford Division has been studying the possibility of introducing an economy-personal car derived from the Falcon in mid-1964. The development of this proposal, referred to as the Special Falcon Program, has been reviewed with Company management on a regular basis over the past few months.

Approval to proceed with the program was given on September 10, 1962, subject to the concurrence of the Operating Policy Committee. The purpose of this letter is to review the market factors which led to this proposal, to outline the program and to request the Committee's concurrence.

The Allegro name is spelt out along the top of the rear fender.

Iacocca and his team were keen to reinforce that the Chevrolet Monza was an ongoing threat and made their thoughts clear:

Among the initial offerings in the 1960 model year, the Falcon quickly established itself as the strongest compact economy car in the industry.

The relative lack of acceptance of the Chevrolet Corvair led the Chevrolet Division to two counteractions, the introduction of the Chevy II in 1962 and the recasting of the Corvair as a low-cost sporty vehicle, the Monza. During the 1962 model year, when Chevrolet had both of these cars to compete against the Falcon, the Falcon and the Chevy II achieved approximately equal volumes. Monza sales proved to be surprisingly strong, with indications that many Monza sales were incremental to Chevrolet.

What Iacocca meant by “incremental sales” is that Monza buyers were not previously owners of Chevrolet cars. They’d traded-in other brands. He then hammered home who these Monza buyers were:

Its value to Chevrolet is even greater than indicated by the sales data since the Monza owner includes a disproportionate number of young buyers who may be contributing to a long-term General Motors advantage.

And now we arrived at the “winning” entry. So rushed was this proposal that the white di-noc film used to simulate paint was still damp in places when it was rolled out into the sunshine.

The Plan then outlined Ford’s actions to counter the Monza and Chevy II:

In 1963 Ford is taking additional actions aimed at improving our share of this market (with) the Falcon convertible, hardtop and Sprint models, and the Falcon V-8 engine program. These actions are expected to improve our position in the compact market; however, we anticipate that these models will tend to compete more directly with the Chevy II special models than with the more unique Monza.

Carrying Cougar badges, the left side, especially the side scoops and C pillar, impressed the decision makers.

It is at this point that Iacocca issued a warning that to do nothing will impact Ford’s profits and volume:

The Ford Division believes that the compact sporty car market segment, now dominated by Monza, requires more aggressive counteraction than we can provide with the Falcon.

Summarizing briefly, the Ford Division believes its approved forward plans will provide good market coverage in the primary automotive markets with the exception of the sporty car market. This segment is a unique market. It is important beyond its size due to the apparent opportunity for conquest sales, first new car sales and the potential for re-establishing a favourable Ford image with the younger age groups who dominate this market area.

The right side of the proposal featured a slimmer C pillar and different side body treatment.

Moving on from his warning, Iacocca championed the Special Falcon project. He pointed out the extensive research had been done and alternatives evaluated:

The Ford Division has studied a number of types of sporty cars including both 2- and 4-seaters derived from every practical baseline ranging from a Ford of Britain sports car and the original 2-seat Thunderbird to Cardinal, Falcon and Fairlane derivatives.

Based on analysis of existing cars in this segment as well as market research the Ford Division has concluded that a new Ford entry in this market should include four basic characteristics: four-passenger capacity, both 6- and 8-cylinder engines, attractive styling and unique appearance and a low price.

Next came commentary on the financials. It is interesting to note that the submission estimates the total volume of the Special Falcon to be 150,000 units. It actually sold 400,000+ in the first 12 months.

The Ford Division considers the objective unit economic profit of $765 satisfactory in that it is about the same as other (Ford) low priced specialty models.

Based on the volume assumption considered most likely by the Ford Division and the Marketing Staff (total volume 150,000)…..profit of about $14 million annually will be realized.

After HFII asked for two inches (52mm) more rear leg room, the Special Falcon was re-configured from the front windscreen back. Doors were lengthened and the roof line heightened slightly. The differences can be seen in these two images taken eight weeks apart.

Iacocca then summarised the main points.

The Special Falcon Program outlined in this communication is considered a major element of the Ford Division's Market Share Improvement Plan, and is expected to improve the Division's actual volume and profits significantly.

The addition of a Ford economy-personal car is an opportunity not only to increase our profitability, but also to improve our over-all corporate image and our long-range corporate strength.

In our judgment, supported by the research conducted to date, the product proposal developed appears to be the right product for this market.”

Iacocca’s proposal concluded with a quaintly worded request for approval.

“The Ford Division requests the Committee’s concurrence in the program as outlined.”

The Operating Policy Committee did so concur. And so it was that an automotive icon was created and reputations were established

Hal Sperlich, Lee Iacocca and Henry Ford II. All have been inducted into the Automotive Hall of Fame. Copyright Ford Media 2021 and Automotive Hall of Fame.