It's the Ford Mustang against the Chevy Camaro in a race for muscle car sales dominance, and Ford is aiming to take the lead with gas mileage.

Yes, fuel economy.

Ford Motor Co's iconic Mustang, revered for powerful race modified models over four decades, has never been known for fuel efficiency, but by 2011 it will get 30 miles per gallon on highways, according to the U.S. automaker.

The Camaro, brought back into production in 2009 after a seven-year absence, has a V-6 engine that gets 29 miles per gallon on the highway and 304 horsepower.

Ford wants to close the performance gap between base models of the Mustang and Camaro with a 2011 model year Mustang, scheduled to begin production early next year, that will have V-6, 305 horsepower engine, six-speed transmission, and get 30 mpg on the highway.

When you are buying a sports car, you want to have that feel of performance, said Barb Samardzich, Ford's head of powertrain engineering. At the same time, there is no reason why you should have to compromise on fuel economy.

Ford is playing a little catch up with the Mustang fighting for the same piece of the pie as the Camaro, IHS Global Insight analyst Aaron Bragman said.

The Camaro took them by surprise in terms of the power and fuel efficiency of their V-6, Bragman said. They are trying to make Mustang more competitive, and they have to ... because the Camaro is eating their lunch in terms of sales.

Through October, Mustang 2009 sales totaled 56,469 in the United States, while Camaro sales totaled 47,233. Camaro U.S. sales began in April, and it has been outselling the Mustang for several months.

They want to get that sales leadership back, Bragman said of Ford.

The 2011 Mustang will represent a 25 percent highway mileage improvement over the current version using a new 3.7 liter V-6 engine, six-speed automatic transmission, better aerodynamics and other changes.

Ford also added features to the V-6 Mustang that had been found on the more expensive versions of the car, including standard dual exhausts and better brakes. The V-6 accounts for about half of all Mustang sales.

Ford has found that customers have embraced smaller engines in many vehicles, such as the Fusion mid-sized sedan where 80 percent of 2010 model year sales have been in 4-cylinder or hybrid drives.

Ford said it would keep making V-8 versions of the Mustang.

I think we will see V-8s in Mustangs for a very, very long time, Samardzich said.

Ford has not said how much the 2011 Mustang will cost, but executives said it would remain competitive with current versions.

(Reporting by David Bailey; Editing by Toni Reinhold)