Automotive engineers have always said it: Horsepower and fuel economy don’t have to be mutually exclusive. Ford aims to prove it with a new V6 engine in the Mustang for 2011.

Ford says the new engine will produce 305 hp, just 10 less than the Mustang GT’s V8, and more significantly, one more than the V6 in the Chevrolet Camaro. The new Mustang will also get a new pair of six-speed transmissions, both automatic and manual.

The new Mustang V6 displaces 3.7 liters, 300 cc less than the old V6, and 280 lb.-ft. of torque. It develops this extra power using double overhead camshafts, four valves per cylinder, and variable-valve timing.  The redline has been raised to 7,000 rpm.

Ford says fuel economy is 25 percent better than the old 4.0-liter V6. With the six-speed automatic transmission, the 2011 Mustang is EPA rated at 19 mpg city and 30 mpg highway, up from 16/24 for the 2010 model. Ford says the new aluminum engine also weighs less than the old V6.

Rumors persist that the Mustang GT will get a new 400-hp V8 to keep it ahead of the V6.

When we tested the 2010 Mustang GT against its two closest competitors, the Chevrolet Camaro SS and the Dodge Challenger R/T, we found the Mustang was the most fun to drive and the easiest to live with, even though it was down on power and short one gear compared to the others. We’ll see if these improvements for 2011 address the Mustang’s shortcomings on paper and keep it on top in the real world. The 2011 Mustang goes on sale in spring 2010.

See our current Ford Mustang GT review, available to online subscribers.