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I don't think the Camaro needs 750 hp to compete with the Hellcat or GT500. It already does and holds its own at 650 hp on a track and in a straight line below 100 mph.
The reason Camaro doesn't sell well, as a guy who previously owned a 2018 Mustang GT PP1 A10 and upgraded to a '21 ZL1 this year, is the following (IMO):
1. Visibility/openness - the Mustang has more glass, while the Camaro has more sheetmetal, giving the Mustang a more open feel. Rear deck lid height - Mustang is lower, so you can see better. Mustang has smaller A pillars - all of these add up to the Camaro feeling closed in compared to the Mustang, thus, the average buyer doesn't get along with it as well as the Mustang. The first time my wife rode in the ZL1 she said "I feel like they forgot to put on the rest of the windshield." Think of her as an "average" consumer who doesn't care about track times, and you'll understand.
2. Usability - the Mustang has a larger trunk with a larger more useful trunk opening. Mustang has 1" shorter doors and higher seats, making ingress/egress easier than the Camaro. Mustang has better ergonomics (who's idea was it to put the door pockets in the Camaro behind the driver seat?). Mustang has a higher seating position, making it feel more "normal", rather than sports car like, thus appealing to a wider audience.
3. Styling - while I think they both look cool, the Mustang styling is more universal, while the Camaro's styling is a bit more polarizing. The fastback shape of the Mustang can't be denied in the styling dept., it looks great. Trim for trim I'd wager that most people prefer the look of the Mustang.
4. Name recognition/ historical significance. The Mustang is more famous and simply a bigger brand name than Camaro, no doubt about it. Ford has sold twice as many Mustangs than the Camaro in all of history. Ford has a more storied history with the Shelby relationship, etc.
While I love my ZL1, the Camaro doesn't appeal to as wide variety of consumer as the Mustang does.
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2021 Camaro ZL1 A10
2022 GR Supra 3.0
Past:
2018 Mustang GT Premium w/ PP1, MR, and A10
2007 MazdaSpeed3
1995 Pontiac Trans Am
1987 Camaro Z28

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