The MPG edition Mustang came out in mid-1975 and included lower gearing for higher MPG ratings. It wasn’t until the 1976 model year that these models got their own fancy name.
The MPG models came with Ford’s base 2.3L, 140 cubic-inch inline-four with 88 hp. The MPG models got a special 3.18:1 rear-axle ratio whereas the standard was 3.40:1. Starting in 1976, Ford called all base-model 2.3L four-cylinder cars with this gear ratio MPG models to highlight the fact that they had a high-MPG car available in that era of rising gas prices and gas shortages. MPG clearly stood for Miles Per Gallon which was pretty popular as the price of gas started to skyrocket in the mid 1970s.
For a car being touted as an MPG leader it got 31 highway and 22 city, from the EPA’s rating system in that era. The 4-speed car’s MPG figures were 34 highway and 24 city.