It's an urban myth.
Here's a rather long analysis from Rutgers Law Review. Page 1020 is were they discuss the myth itself.
Here's the Cole's notes version:
However, a 1991 law review paper by Gary Schwartz[15] claimed the case against the Pinto was less clear-cut than commonly supposed. The number who died in Pinto rear-impact fires, according to Schwartz, was well below the hundreds cited in contemporary news reports and closer to the twenty-seven recorded by a limited National Highway Traffic Safety Administration database. Given the Pinto's production figures (over 2 million built), this was not substantially worse than typical for the time. Schwartz argued that the car was no more fire-prone than other cars of the time, that its fatality rates were lower than comparably sized imported automobiles, and that the supposed "smoking gun" document that plaintiffs claimed showed Ford's callousness in designing the Pinto was actually a document based on National Highway Traffic Safety Administration regulations about the value of a human life rather than a document containing an assessment of Ford's potential tort liability.Bottom of the pageIIRC the Malibu/Lemans/Cutlass/Regal had a higher fuel tank rupture rate.
Later Pintos were fairly decent, but the Japanese had pretty much moved on to fwd cars with better mileage and more importantly interior room.
Internally, the Pinto was one of Iacocca's pet projects. Most of the engineering staff wanted a version of the European Fiesta, which was eventually brought over, but really too late, and never in enough numbers. Both were replaced by the Escort in 1981.
