The year 1981 was a somewhat sleepy time for Fox body Ford Mustang performance, as the most powerful engine in the lineup, the 2.3-liter turbo four, was dropped. That made the 4.2-liter V-8 the most powerful engine option, but it had just 115 horsepower and 195 pound-feet of torque on tap. This engine could also only be had with a 3-speed automatic transmission. The sporty McLaren M81 Mustang had been developed and was planned for regular production, but in the end only a handful were built.

The base engine continued to be the 88-hp 2.3-liter inline-4 and the 91-hp six-cylinder. One bright spot was a new rear axle design that featured Traction-Lok, which reduced wheel hop and made taking off from a standstill more direct.

T-Tops became available in 1981 for both notchback and fastback variants, but the 1981 T-Top was produced in very low numbers from the factory. 1981 also represented the final year for the Mustang Cobra, and if anything the ’81 Cobra served to water down the Ford performance ethos. With the turbo engine gone, the underpowered V-8 routed power to a final drive ratio of just 2.26:1.

The Cobra featured a two-tone paint scheme with blacked-out rear window louvers, aerodynamic ground effects, and an available graphics package with pin-striping and a “Cobra” graphic on the top of the non-functional cowl-induction hood.

In 1981, Ford returned to racing with the Miller Mustang, which ran against a crowded field of BMWs, Datsuns, and Porsches. The Miller Mustang ran very well at the IMSA Camel GT race at Road Atlanta, and was only narrowly edged out for the win by the iconic Porsche 935. The IMSA-spec Ford Mustangs were essentially silhouette racers that had little in common with the road cars, but the return of the Mustang name to the track was a significant and celebrated event.