Bill Pierre Ford

Ford Motor Co. is reviving a bigger, more powerful V-8 engine for its Mustang as the muscle car tries to fend off a sales challenge from General Motors Co.’s Chevrolet Camaro.

A Mustang version with the 5-liter V-8 will be available in 2010’s second quarter, according to the Dearborn, Michigan-based automaker. That engine size had been retired in 1995 after three decades of use in the car, Ford said in a statement today.

Ford, in a rivalry that dates to the late 1960s, is adding an engine with 412 horsepower, 31 percent more than the current 4.6-liter Mustang V-8. The Camaro, with a 426-horsepower V-8, debuted in April and has outsold the Ford model each month since June. GM said that’s given it a chance to wrest away the U.S. sports-car annual sales crown for the first time since 1986.

“This is the next salvo in the Mustang-Camaro war that’s been going on for 42 years,” said John Wolkonowicz, an auto analyst at IHS Global Insight in Lexington, Massachusetts. “Ford needed to do this.”

The Mustang with the new V-8 will be a 2011 model and will be shown at next month’s Detroit auto show. Ford also will offer a new Mustang V-6 that generates 305 horsepower, 1 more than the comparable Camaro engine.

Ford hasn’t announced prices for the new Mustangs. The current V-6 model starts at $20,995, while the V-8 GT version begins at $27,995.

Fuel Economy

Ford said each new engine is more fuel-efficient than the equivalent Camaro offering.

The new Mustang V-6 will get 30 miles per gallon of gasoline in highway driving and the V-8 will get 25 mpg, the automaker said. The Camaro V-6 model, which begins at $22,680, gets 29 mpg on the highway, and the V-8 version, with a starting price of $30,745, is rated at 24 mpg, according to Edmunds.com, a research firm in Santa Monica, California.

Sports-car buyers are more interested in performance and style than fuel economy, said John Fitzpatrick, marketing manager for the Camaro.

GM plans to introduce a Camaro convertible at auto shows next year and begin selling it in early 2011, with the expectation that the version may eventually account for a third of the car’s sales, he said.

The Detroit-based automaker revived the Camaro this year after halting production in 2002. GM sold 6,867 of the cars last month in the U.S., while Ford sold 3,627 Mustangs.

“We didn’t realize we would dominate like we have, gaining 40 percent of the segment,” Fitzpatrick said in an interview.

‘Initial Glow’

Ford global marketing chief Jim Farley said Camaro is ahead in sales for now because of pent-up demand from Chevy loyalists,

“You’ve got to judge the success of a sports car after everyone who wanted one in the first 18 months is gone and the initial glow has faded,” he said. “We never left the market, so our opportunity is different.”

The Camaro has taken the sales lead in part because of more modern styling, said Wolkonowicz, the Global Insight analyst. He said he expects the GM model to keep outselling the Mustang next year, by a narrower margin.

“The Mustang isn’t as fresh and new,” Wolkonowicz said. “The Camaro makes a stronger visual statement.”

The competition helps the image of both automakers, even though sports cars are only 2 percent of total U.S. auto sales, Wolkonowicz said.

“This brings back the battle for bragging rights,” he said. “This is what the Ford and Chevy brands are built on.”

Ford rose 11 cents to $10.24 at 9:38 a.m. in New York Stock Exchange composite trading. Ford’s $10.13 close on Dec. 24 was its highest since Sept. 7, 2005.

In July, Ford announced that it would bring the Ford Mustang back to NASCAR in July 2010 when a limited number of Mustangs will race at the Daytona International Speedway in the NASCAR Nationwide Series. The Roush Fenway Racing and Con-way Freight Mustang was officially unveiled yesterday.

While the Mustang is no stranger to the track, competing in various drift events  — the Grand-Am Koni Challenge Series, and the SCCA World Challenge Series to name a few — but the famous Ford Mustang has been absent from stock car racing since 1969. Next July will be the first time since then that the Mustang will hit the oval track.

“This truly marks the start of the next era of Mustang Racing. We fully expect this Mustang, with drivers like Colin Braun behind the wheel, to start to enjoy the kind of success so many other Mustang racing programs have enjoyed throughout the last four decades,” said Brian Wolfe, director of Ford North America Motorsports.

“Mustang is a proud and historic brand for Ford. This is a car born to race, and NASCAR is the next logical step for its racing pedigree.”

Even though the Mustang is making a return to NASCAR, the car will only be raced in limited numbers, meaning there will be two different Ford vehicles on the track next season. The very heavily modified Ford Fusion stock cars will still see track time in the Nationwide Series. Keep your eyes peeled next season when the Ford Mustang finally gets back to the stock car circuit.