Ford's (NYSE:F) Mustang and General Motors' (NYSE:GM) Camaro have been engaged in an epic muscle-car battle throughout much of the past five decades. The line has been drawn in the sand, and you're either a Ford guy or Chevy guy, no gray area. The rivalry is as strong as the MLB's Yankees vs. Red Sox or the NFL's Cowboys vs. Redskins. The Mustang came to market first in 1964 and enjoyed much success over its rival Camaro, which came out a few years later, and it continued to dominate the sales title for 31 of the 42 years in which both iconic muscle cars were both produced.
That trend has reversed in the past few years. Can Ford's next-generation Mustang bring it back to the top?
One problem Ford will have is the difference in sales strategy. Ford CEO Alan Mulally has set forth a global strategy titled "One Ford" that has aimed to make sure any vehicle produced has the ability to sell globally. For the Mustang to sell overseas, it has to shed some weight and become smaller and more fuel-efficient -- qualities that don't go hand in hand with the iconic Mustang.
Fortunately for loyal Mustang fans, Ford has a plethora of engine options that will give it the flexibility to appease many different markets. Power-hungry American consumers can still opt for the top-of-the-line V8, while consumers overseas can opt for a smaller turbocharged EcoBoost engine, which Ford said will be available for the 2015 model.
The difference is drastic. Consider that a standard 2014 model Mustang with a manual V6 gives 305 horsepower. The GT steps up to a 5.0-liter V8 producing 420 hp, and the supercharged V8 gets a staggering 662 hp -- which is just outrageous. Disregarding the supercharged V8, the Mustang comes in a little behind the Camaro's manual V6 that produces 323 hp, and using an engine it shares with Corvette will produce 500 hp.
Ford loyalists can at last rejoice that the 2015 Mustang will finally get the independent rear suspension they'd been pleading for. I think the horsepower and torque matter less to which muscle car will win the sales crown, and the exterior design matters more -- and the Camaro does get the slight nod recently in styling. It has shown in the sales.
If Ford can't strike the right balance between appeasing the U.S. consumer and those overseas, the Camaro -- which has now outsold the Mustang for the past three years -- will continue to win the age-old muscle-car rivalry. According to Automotive News, Ford of Europe design chief Martin Smith called the balancing act "a really interesting challenge" and added: "What will emerge from that whole process is one of the best sports cars in the world and one that is still affordable."
That's a pretty confident statement, but keep in mind that Ford is on a hot streak of producing extremely popular vehicles. I agree with Smith, and I think the next-generation Mustang is going to be a hit here in the U.S. and globally. It needs to be a hit to restore Mustang sales -- which have dropped significantly -- back to the No. 1 spot.
The Mustang's value goes far beyond its sales and truly represents Ford's brand image. However, Ford is enjoying improving market share in Europe, even amid an industry still in decline, and it's also setting record sales in China. Right now the charge is being led by the Fusion, Focus, Fiesta, and Escape -- but a little muscle could go a long way. Ford needs to continue adding to its strong global lineup, and it expects, and needs, the Mustang to deliver the goods.
Investors are optimistic about Ford's future, and the stock has reflected that view, rising 70% over the past 12 months as of this writing. I believe Ford will continue to do well as a company and as an investment, and next year's redesigned Mustang and F-150 will be further reason why.