Quote from 64pony
I was informed by the restorer that he heard the first 100 Mustangs were built torn apart and rebuilt as they were used as the prototypes to set up the production line.
There were aproximately 150 preproduction Mustangs built at the Dearborn Assembly Plant. As mentioned earlier, they were used mostly for advertising, executive "loaners", and promotion, while some were used for engineering changes, crash testing, and even racing. They were not made for sale to the public.
Before the "pre production" Mustangs were built at DAP, an unknown number of so-called Pilot Plant cars were built at Ford's Body and Assembly Division, located at Allen Park, near Dearborn. A Pilot Plant is a special, scaled down version of an assembly line used to
test out production techniques. Pilot Mustangs were built in small batches to work out assembly line problems before they developed at a full scale assembly plant. This process saved time and money by discovering and fixing assembly problems before they could cause costly shutdowns or slowdowns at the actual assembly plant. These cars were given special VIN's with an "S" code for the assembly plant.
Of interest here is one such Pilot Plant Mustang that has been documented. Identified as 5S08K100002, this convertible was scrapped and converted into a show car named Mustang III, and was leased from Dearborn Steel Tubing for use in Ford sponsored Rod and Custom shows in 1964 and 1965.