SHELBY'S ENTRY INTO car building--as the creator of one of the most famous automobiles of all time--led Ford into big- time racing. That in turn led to Shelby's friendship with Iacocca, whose interest in racing and high performance had been limited to what they might do to help Ford sell cars.
"Iacocca was and is a very pragmatic guy," says auto historian Leo Levine. "I don't think he was performance-oriented himself. He was interested in anything that would help sell cars, and if he saw performance selling, then he wanted to go after performance."
In the early '60s, GM and Chrysler were both ahead of Ford in high-performance image, Chrysler with success on the drag strip and Chevrolet on the NASCAR stock-car racing circuit. It was Shelby's idea to build an American-powered car that would win against Ferrari, Maserati and Porsche in sports-car racing. His dream car, the Cobra, was in his mind long before he began building the prototype. He was a terrific success as a driver, but in 1961 there was neither the big-time TV sports coverage nor the sponsorship to make championship race-car driving the lucrative career it is today.
"I never saw racing as anything more than a means to an end," Shelby says. "Racing was a way to make a name so I could do what I had always dreamed about--build my own car."
After the discovery of his heart murmur in 1960, Shelby moved from Texas, where he grew up, to Los Angeles, the hot-rodding center of the world. It was the perfect place to build a hybrid lightweight, V-8-powered, foreign-body roadster that would win on the track and sell on the street. A lightweight, American V-8-powered sports car (unlike the powerful but heavy Corvette) was a simple concept on which others had spent millions. Shelby was one of the few to try it with no money--and virtually the only one to succeed.
The official story is that in 1961, Shelby heard that the British AC sports-car company had lost its engine supplier. He went to England to propose that AC ship him cars, on credit, to California, where he would install Ford V-8s. The V-8s would turn the already quick ACs into rockets. Shelby would race them and sell them as consumer sports cars on the strength of their victories, bringing glory and riches to all involved. Impressed with the concept, and the assumed commitment from Ford, AC agreed.
Then Shelby told Ford that AC agreed to provide the cars and asked Ford to provide engines--on credit. Ford's pay-off would be a hood plaque proclaiming "Powered by Ford."
But the pitch to Ford included a hook: In return for engines on credit and financial support for the racing program, Shelby would deliver Ford a World Manufacturers' Championship.
In its first race, in 1962 at Riverside Raceway, the AC Cobra outran the competition before it was sidelined by mechanical problems. The same thing happened in the second race. But by the end of the first racing season, Shelby's engineering staff had corrected all the problems. The AC Cobra took a national championship in its second season and the World Manufacturers' Championship in 1965.
The glamour of sports-car racing, especially on the European circuits, appealed to Henry Ford II, who had already tried and failed to buy Ferrari. In 1966, the Cobra racing program was shunted aside for a Ford race car called the GT-40, which eventually won Le Mans in a team effort that, under Shelby's leadership, gave Ford a 1-2-3 sweep.
In 1965, at Iacocca's request, Shelby produced a modified Mustang called the GT-350, which boosted the image of the Mustang at the beginning of Detroit's muscle-car era. But Shelby's interest waned in 1968 after Cobra production was stopped and GT-350 production was moved from the small facilities in Southern California to a mass-production plant in Ionia, Mich. Mass production blunted the fine edge of performance that Shelby took pride in. The advent of emission-control regulations in 1968 also diluted enthusiasm for V-8 performance. Shelby foresaw the demise of performance cars and left the business of making GT-350 Mustangs to the Ford Motor Co. He bought a horse ranch and pursued cattle-breeding and real-estate ventures in Texas. He also ran a big-game-hunting safari business in East Africa.
Iacocca and almost every other Detroit auto executive were facing rough times. The 1974 oil embargo would spell the end of the long-running boom for American cars, and the first wave of domestic economy cars built in response to Japanese imports was not a success. In the late '70s and early '80s, when oil prices stabilized and Americans had gotten used to paying a dollar a gallon at the pump, some buyers went back to big cars. But although full-size American cars were selling well, a growing market sector was buying European and Japanese imports.