You would be incorrect. The original body style of the Beetle was in production form 1938 until 2003, with an excess of 20 million cars sold, the most of any one body design of all time and in the top 5 total sales of all cars. The Mustang on the other hand has sold 8 million cars but I am willing to wager that in excess of 95% of these cars were sold to the United States and Canada, so the Mustang's effective audience is only about 300 or so million people and a select few other enthusiasts.
Furthermore, I have to disagree throughly with your assertion that the Mustang is more iconic than the Beetle. The Mustang definitely is in the top 10, but the simple fact of the matter is that the Bug is known the world over whereas the Mustang is more more or less known as a US only car. The Beetle was licensed to be built in countries such as Nigeria, Brazil, Mexico, Thailand, and Indonesia.
The fact of the matter is that the VW Beetle is instantly recognizable for North Americans, South Americans, Ocenians, Europeans, Africans, Asians, and even the poor sods working in Antartica. Literaly every continent in the world has been exposed to this vehicle on a scale unmatched by any other car. It is almost certainly the most recognizable car to the people of the world, and I think this is one of the main factors why it is so iconic.
Also, one must consider the absolutely unique and frankly radical look of the Beetle. It stands out much more than a Mustang as far as I am concerned. The Beetle's radical styling is what burns it into people's minds.
The only car in my eyes to come close is the Ford Model T.
After taking this into account, do you still believe that the Mustang is the most iconc car of all time?