"The XR7-G was supposed to be the equivalent of the Shelby Mustang for Mercury dealers," Royce Peterson said.

Peterson is Registrar of the XR7-G Registry and has a copy of a historic Lincoln-Mercury Division "Intra-Company Communications" letter, dated August 7, 1967, that refers to a "Hertz European Cougar Program" for the 1968 model year. He believes this Hertz directive led to the creation of the XR7-G, a specially built Cougar in the manner of a Shelby Mustang, a fact not easily discerned with the simple addition of the letter "G."

See all 26 photos

The timeliness of this program, i.e. Hertz requiring the delivery of vehicles by January 1968, and the many special parts required, some of them very difficult to install, negated the use of a regular assembly line. Instead, Ford would use Shelby American, which built small quantities of Shelby Mustangs in California. The letter states, "Our Fleet and Lease Sales Department has requested a cost estimate for the Shelby American installed items." Apparently, Ford involved Shelby American very early in this program.

Meanwhile, out on the race track, Shelby American had put together its Terlingua racing program to battle Cougar for the Trans-Am sedan racing championship of 1967. Ford had won the Over 2.0-Liter class with the Mustang in 1966, the first year of this series. Ford's "Total Performance" racing campaign was in full swing. For Cougar to win the Trans-Am would not be good for Ford's "win on Sunday, sell on Monday" philosophy. Mustang was already a million-seller. Cougar was more of a luxury ponycar slotted between Mustang and Thunderbird, although performance remained a key selling point.

Mercury, for 1967, put together a "top shelf" racing operation, in Peterson's words. Bud Moore Racing campaigned Cougars driven by Dan Gurney (captain), Peter Revson, David Pearson, and Ed Leslie. They had a factory-backed budget and looked like the favorite to win; and then Carroll Shelby got involved with his low-budget, quickly thrown-together Terlingua Racing Team. In the last race of the year, at Riverside, Jerry Titus drove a Shelby Mustang to victory to edge out Cougar for the manufacturer's championship by a slim margin of two points.

With such fierce competition, we wonder how Shelby reacted to building a custom Cougar for the street to compete with his own G.T. 350 and G.T. 500 road cars. Mercury dropped out of the Trans-Am in 1968, a fact Royce Peterson attributes to Cougar giving Ford "too much competition." Ford gave Bud Moore the factory program to race Mustangs in the Trans-Am for 1968 and 1969. Carroll Shelby had his plate full with his Shelby Racing company and building cars for the street, something Dan Gurney did not have to deal with.

See all 26 photos

"We sent Gurney a letter once asking him to tell us his end of the story. He wasn't even allowed to have any input at all. He was told the thing was happening and his name was going to be associated with it. He did some publicity shots, and he said it could have been a lot more."

We ran into the Cardinal Red XR7-G pictured here at the Cougar Club of America (CCOA) 50th anniversary show in Tulsa this past April. Brian Carpenter was competing in concours judging with his "G-car" and had scored the highest point total (just 10 points deducted) of any car judged.

Carpenter is not new to the Cougar scene. He currently owns eight classic Cougars and was familiar with the XR7-G when he ran across this unrestored original in 2003. He knew this was a true XR7-G car. He wanted the Cougar for its many options, which is when he began looking into the history and discovered XR7-G Cougars were built on the same assembly line as the 1968 Shelby Mustangs.

See all 26 photos

A big deal is the power sunroof, which Brian believes is the "very first" American car with this option. Installing a sunroof in a small number of cars would hold up a factory assembly line of that time. A specialty shop is what Mercury needed. Shelby American had been assembling Shelby Mustangs in California. For 1968, A.O. Smith Corporation, a pioneer making fiberglass parts (for Corvette), would take over G.T. 350 and G.T. 500 production in Ionia, Michigan, conveniently located 129 miles by rail from Dearborn Assembly, where Cougars were built.

On this same assembly line, side by side with Shelby Mustang production, workers turned out XR7-Gs. This fact elevates the XR7-G to more of a hand-built car, over and above assembly line production.

"They started putting the sunroofs in at A.O. Smith," Carpenter said. "When they were cutting [the roof] and pressing in the sunroof, they were making the roof a little wavy, so to hide it all, they all got vinyl roofs. They installed some at A.O. Smith, and then to improve quality, some of the cars went back to ASC, which had its own installation place in Detroit."

See all 26 photos

The front valance, modified to accept Lucas (or Marchal) fog lights, was another specialty change that A.O. Smith would have to make to the Cougar XR7s that Dearborn Assembly shipped by rail to Ionia. A.O. Smith's production line also installed Raydot side mirrors, made in England, drilled the hoods for pins, and installed fiberglass hood scoops, which A.O. Smith made. Many other items came right out of the Shelby parts catalog, an incentive for Shelby to get involved with Cougar production.

How hot was this Cougar build compared to a Shelby? The XR7-G Registry points out the first XR7-G was a concept built in the fall of 1967 for Hertz. The next eleven cars had X-code, 280hp, premium-burning 390 two-barrel engines and C6 automatics. They were slated for display in airport terminals and train stations, and were delivered to Hertz in February 1968.

Another 188 XR7-Gs went to Hertz to fulfill its initial request for 200 that got the program off the ground. A popular engine choice was the 390 GT four-barrel, backed by an automatic and 2.75:1 gears in a 9-inch rear axle. Options included sunroof, power steering, A/C, disc brakes, and tilt-away steering.

See all 26 photos

Shelby Automotive, the Michigan-based company founded in 1968 when Shelby American in California stopped modifying Mustangs, contracted with A.O. Smith to continue assembling XR7-Gs for the balance of 1968.

Production started March 1, two months behind the Hertz timetable. With a half model year left, total number of cars built was 619, per Kevin Marti.

Carpenter's 1968 XR7-G came with the 390 four-barrel, which is rated at 325 hp. The hottest version would have been one of the 428 Cobra Jets, of which a mere 12 were made and five are known to exist. Just three were 428 CJs with four-speed transmissions.

Carpenter found out his XR7-G has DSO 84, which is "Home Office Reserve" shipped to "Ford Motor Company, L-M Los Angeles Sales" in Pico Rivera, California. He speculates Mercury might have used this car for promotions, such as for salesmen to drive to dealerships in California to show them the G package so they would order cars.

See all 26 photos

Although the Marti Report shows the car was built on March 21, this XR7-G didn't ship to California until "almost June," just a couple months before the 1969 models came out. A Ford employee, Lorraine May from Venice, California, bought the car from the L-M Sales Office. George Huismann, who owns Design Concepts, an OE supplier for Ford, bought the rare Cougar next and brought it home to Detroit in 1986. Huismann sold the G to Dan Hennon, quality manager at Ford's Lima, Ohio, plant. In 2003, Hanna sold the Cougar to Carpenter, who restored the XR7-G to concours condition.

At A Glance

1968 Cougar XR7-G

Owned by: Brian Carpenter, Battle Creek, MI

Restored by: Owner

Engine: 390ci/325hp V-8

Transmission: C6 3-speed automatic

Rearend: Ford 9-inch with 3.00 open gears



Wheels: 14x6 styled steel with XR7-G center caps

Tires: F70-14 raised white letter Goodyear Polyglas

Special parts: XR7-G option (see sidebar)

The XR7-G Option

XR-7 interior including leather seat upholstery; woodgrained dash with tachometer, trip odometer, oil pressure and amp gauges; map lights; rear seat courtesy lighting

Unique interior console with switches for fog lamps and sunroof

Aluminum running-cat valve covers

XR7-G center caps

Lucas fog lights in a unique front valance panel

Raydot bullet shaped remote controlled racing side-view mirrors

Fiberglas hood scoop, non-functional

Chrome locking hood pins

Vinyl roof covering

Leather door pull straps

XR7-G trunk lock cover

Sport grip wrapped steering wheel with gold Cougar emblem

Dashboard identification Cougar XR7-G in gold

Wood shift knob with inlaid gold running cat

XR7-G badges on passenger side headlamp cover and C-pillars

Rear valance with chrome cutouts for slash cut "pipe-in-pipe" exhaust tips

A third, extra-loud horn, made by Delco-Remy

XR7-G Engine Availability

Code Engine Horsepower Torque Notes 6 302 2V (not published) (not published) Low compression F 302 2V 210 @ 4,400 295 @ 2,400 J 302 4V 235 @ 4,800 318 @ 3,200 Premium fuel S 390 4V GT 325 @ 4,800 427 @ 3,200 Premium fuel R 428 4V CJ 335 @ 5,200 440 @ 3,400 Ram air X 390 2V 280 @ 4,400 403 @ 2,500 Premium fuel Show All

Courtesy XR7-G Registry

See all 26 photos The XR7-G was an answer to the Shelby Mustang, but has its roots in Hertz, a company that Ford partially owned. Note the Shelby "pipe-in-pipe" exhausts, which exit through a special rear valance.

See all 26 photos The 325hp 390 GT engine was installed at Dearborn Assembly. This one is stock and numbers-matching, has full smog equipment, but did not come with decals on the air cleaner lid. The XR7-G got a third horn, made by GM Delco and mounted on the passenger side of the radiator support.

See all 26 photos Not all XR7-G valve covers had the running Cougar logo, but Brian's did. Brian found Shelby logos cast on the inside of these covers.

See all 26 photos The open sunroof reveals a gold dash logo, simulated wood instrument panel, special wooden shift knob, and leather cover console. Toggle switches in center give the interior a British sports car look. A "sport grip wrap" on the steering wheel was standard on the XR7-G, as was a gold running Cougar inset in the simulated woodgrain insert

See all 26 photos The shift knob is made of real wood and is a Shelby part, used on the G.T. 350s and G.T. 500s with one difference. The Shelby Mustang knob had an inlaid Cobra medallion, while the Cougar used a running cat logo.

See all 26 photos The front valance was specially made to fit fog lamps, which are made by Lucas on this car. Marchal lights were also used.

See all 26 photos Originally, XR7-Gs were equipped with Rader wheels, which Mercury recalled due to defects and replaced with styled steel, as seen here. Center caps came personalized with the XR7-G logo.

See all 26 photos Raydot side mirrors, made in England, are bullet-shaped and adjustable remotely from inside. This passenger-side Raydot mirror came off a salvage XR7-G in Dayton, Ohio.

See all 26 photos Brian Carpenter owns eight classic Cougars, including a pair of 1967 models, one an XR7 and one he modified to race at club events; a 1969 XR7 390 S-code that is 100-percent original and untouched since it was stored in 1973; a 1969 428 Cobra Jet four-speed project car; a 1969 Boss 302 Eliminator; a 1968 standard Cougar; a 1968 restomod Cougar; and this 1968 G-car.