The 1974 Mustang marked the beginning of the “Mustang II” generation. These smaller cars had weaker engines due to the fuel crisis, and proved to be a hit with buyers. Even with slower cars and higher prices, sales nearly tripled the 1973 numbers, and the Mustang II was named Motor Trend’s Car of the Year. Mustang IIs featured rack-and-pinion steering, which made driving easier and more comfortable. The switch to rack-and-pinion became a popular modification for first-generation owners.
The only optional engine for 1974 was a 2.8L V6. This German-built V6 was derived from the European Capri’s 2.6L V6. Either a 4-speed manual transmission or an optional 3-speed automatic could be used with either engine. As mentioned, for the first time, a V8 was not available in a Mustang, as the emphasis was put on economy instead of performance. The optional V6 put out a “whopping” 105 horsepower. Considering the weight of the car, the smallest engine should have been 105 hp engine and there should have been a 200+ hp V8 wedged between the engine compartment walls.