Ford executive Donald N. Frey shared with David Crippen (1986) how he found out from Henry Ford II that the 1965 Mustang would be approved.
“I remember one day I was in the styling studio, we were still in the final throes of trying to get the Mustang approved, and Lee had picked on the idea that he wanted to introduce it in the ’64 World’s Fair. And the World’s Fair opened — I’ll never forget — April 17, 1964, so we had to be in production by then. Trying to get the schedules worked out, and we had to get the tooling approved, the designs finished, and the durability tests and so forth.
“The time’s getting late, and finally I’m over in the styling studio doing something, and in comes Henry Ford. He sees me standing there, and he says — it was about verbatim, something like ‘That fuckin’ Mustang. I’m tired of hearing about it. You guys got to sell the son of bitch. It’s your ass if it doesn’t. I just want to get rid of you guys.’
“And I realized what he was saying was that he was going to approve it. Now, he had the committee meeting, but I happened to be there early by virtue of having been in the studio that morning. He just took it out on me. And that’s how it really got approved. Lee just wore ’em out.”
How the Mustang’s breakeven point was established
Frey discussed his role with the Mustang, which was to calculate the car’s breakeven point.
“Well, the break-even line was easy to calculate. It was about 83,500 units. I remember the number. Then the question was what’s the incremental line? Well, who in the hell knows? It’s typical corporate finance staff bullshit. . . . George Brown was then head of market research at the corporate level, and later became head of the census bureau. He and I were good friends — both Ann Arborites. George used to bitch about the system. Of course, George says, ‘Why are you screwing around with the incremental numbers for?’ or words like that. I said, ‘I’ve got to get this done.'”
“He said, ‘If they just let you alone to design the car. You’re good at it. We need an automobile. We need good stuff in the marketplace. They give you all this crap to do.’ I said, ‘I’ve got to get the question answered.’ So they ask me in the big meeting they asked what is the incremental volume? I didn’t know what to say. I can’t remember who it was. [Ed] Lundy, say. Or was it Arjay Miller at that time? He said, ‘George, you find out the incremental volume.’
Frey recalls getting back to his office and his phone rings. “George said, ‘Don, what’s the break-even volume in that car.’ I said, ‘It’s 83,000 something.’ He said, ‘Okay.’ We go to the next meeting. We’d done all these magic spreadsheet studies. It’s all bullshit. He declares that the incremental volume will be 86,500 cars, and just as he’s saying it, I’m looking at him, and I swear he winks.”
How they got market research data for the Mustang
Frey noted that the Mustang didn’t have any market research data. So Lee Iacocca tells him, “You get the 12 best automotive writers in the country and show them the car.”
“So we brought ’em in, like Bob Irvin of the Detroit News. . . . I forgot the guy from The New York Times, the Times Mirror out of L.A. We had the principal 12 in the country. Most of them, by that time, I knew. They just flipped. So Lee said, ‘That’s all we need.’ All they wanted to know was when they could get one. They just flipped out. A set of hardened pros.”
Also see ‘Lee Iacocca got lucky with the 1964-66 Ford Mustang’
“So Lee says, ‘I don’t think we’re up to capacity. How much do you think Dearborn can make.’ I said, ‘I think they make 200,000 cars on a 10-hour, six-day basis. He said, ‘We need more cars.’ So he had the balls — and this is Lee’s final direct contribution. Earlier in the program, before we’d made and sold the first car, he went back and sold the second assembly plant. That was the ultimate masterstroke.”
How did Iacocca get a second plant? Frey said, “Sheer blood and guts.” He added that if the Mustang hadn’t sold very well, the second plant could have posed a serious problem.
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RE:SOURCES
- Crippen, David; 1986. “Donald N. Frey Oral History.” the Henry Ford. Interview recorded Jan. 28.
PHOTOGRAPHS:
- fordheritagevault.com: 1965 Ford Mustang photos
I guess you can’t really blame HF III, the Edsel wasn’t that long ago, even though the Falcon did very well.
That rear quarter view of the Mustang 2+2 is beautiful! One of my favorite car designs of all time.
The early 1960s were an interesting time in Ford’s history. The company was still smarting from the Edsel fiasco, as well as the attempt to reposition Mercury and bring out the ultra-luxury Continental.
Some of McNamara’s moves were correct – the Falcon, the Comet, the four-seat Thunderbird and the 1961 Continental. Unfortunately, after 1959, Ford Division fell behind Chevrolet. In the early 1960s, Mercury offered no competition to a resurgent Pontiac.
Ford had nearly outsold Chevrolet in 1959, but by 1962, Chevrolet was outselling the entire Ford Motor Company. Mercury had become a restyled Ford in 1961, and the cars had no real image – certainly not enough to get anyone out of a Pontiac. Mercury was being kept afloat by the compact Comet.
Ford Motor Company’s market share was lackluster in the early 1960s, so Henry Ford II was undoubtedly unsatisfied with the company’s direction, but he was probably also wary of any grand plans. He probably viewed the Mustang as a risky chance for Iacocca’s team to prove itself.
The all-new 1965 Ford, however, was an even bigger project, and more critical to the company’s long-term success. It did get Ford’s full-size offering back on track. But Henry Ford II was probably more comfortable with the new 1965 Ford, as he understood that market.
It would have been interesting to see the direction McNamara would have taken Ford if he had stuck around for even a few more years. We’ve discussed his championing of the Cardinal, and I could see him being much less aggressive in pushing V8s and sporty models in compacts and mid-sized cars. That said, his support for the four-seater Thunderbird and 1961 Continental suggest that he might have been quite receptive to the Mustang.
I suspect that the core problem with the full-sized Mercury was that too much emphasis was placed on parts sharing. That limited the ability of designers to come up with a distinctive look (go here for further discussion).
It’s plausible that McNamara would approve the Mustang, given that it was based on the Falcon platform. I could even see him approving the 1968 Continental Mark III, given that it was based on the Thunderbird platform, and better utilized the Wixom plant. Also note that Iacocca and McNamara did not have an antagonistic relationship while they were both at Ford, so I could see Iacocca “selling” him on those vehicles.
The question is whether he would have moved the 1966 Falcon to the Fairlane’s platform. With that move, the Falcon became an also-ran in the segment it had once dominated. Ford fell far behind the Mopar A-bodies and even the Chevy II/Nova. But I could see McNamara signing off on that move, given the promise of cost savings.
If the Cardinal had gone into U.S. production I would think that one of McNamara’s biggest challenges would have been to generate profitable volume — particularly up through 1965, when import sales were still flagging. In general, he was unusually supportive of product proliferation for his time, so I could see McNamara exploring all of the different ways that the Cardinal platform could be used to pioneer new market niches. For example, might he have moved the Econoline van down from the compact Falcon platform to the Cardinal’s? Or even suggested that product planners explore putting the Mustang on this platform?
By the same token, I could see McNamara considering a shift of the Falcon to the mid-sized platform if it gave the Cardinal more breathing space. Or he could have gone in the opposite direction by shifting the Falcon to the Cardinal platform by giving it a longer wheelbase, fancier styling and perhaps V6 power.
In other words, I think that if the Cardinal had seen the light of day in the U.S. that it could have meaningfully changed how Ford rationalized its platforms as the 1960s progressed. McNamara may have been more inventive on this front than his successors, but I could also see an Iacocca being intrigued by the possibilities of, say, a mid-engined sports car based on the Cardinal platform.
I understand what the “break even” volume is, but I am not familiar with an “incremental volume.” Can someone define it for me? Thanks.