The third-generation Mustang was produced from 1979 to 1993. Built on Ford’s ubiquitous Fox platform, it evolved through a number of sub-models, trim levels, and drivetrain combinations during its production life.
In 1979 the 302 cu in (4.9 L) was dropped in favor of a new 255 cu in (4.2 L) V8 due to its better fuel economy. It was the only V8 offered in 1980 and 1981. Basically a de-bored 302, the 4.2 L V8 had restrictive heads and managed to produce 120 hp, the lowest power ever for a Mustang V8. Compounding the lack of power, the 4.2 L was mated only with the three-speed automatic transmission. This meant the 2.3 L Turbo 4 was the sole "performance" engine.
Source: Wikipedia, 2012