in the midst of record high oil prices and Japanese auto makers raking in the sales with hybrid technology, it appears history is repeating itself, as Ford prepares to do it all over again, but with a twist.

The diminished size of second generation pony car of 1974 was a result of the mounting Energy Crisis which erupted in 1973. Ford figured a smaller Mustang could compete better with the Toyota Celica, and they were correct in doing so, as the second generation Mustang in its first year sold almost as much as the first generation's best year.

Fast forward 35 years - in the midst of record high oil prices and Japanese auto makers raking in the sales with hybrid technology, it appears history is repeating itself, as Ford prepares to do it all over again, but with a twist.

Compared to the Mustang's current competitors, which include the 2008 Dodge Challenger SRT8 and upcoming 2010 Chevrolet Camaro, Ford's North American design director, Peter Horbury said, “We have a car which I think is more suitable for the times than the Challenger and the Camaro, especially the Challenger - it is a huge car when you see it on the road."

Overall, both Challenger and Camaro are larger vehicles compared to the 2008 Mustang. When the restyled, re-engineered 2010 Mustang goes on sale early next year the overall length and width will be the same as the 2008.

However, Horbury said during an interview at a Ford event last month in New York, "By cleverness in design, we've been able to make it look like the wheels are further out, further forward and further rearward,"

"The center line is the longest part" of the next Mustang, he said, "and the widest part of the car is the middle. From there on, you can tuck it in and bring the apparent size down.”

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Ford Says Next Mustang Will Look Smaller