Cadillac to take another shot at small luxury sedan leaders

Cadillac hopes the third time's a charm.

In yet another bid to unseat upscale German brands BMW and Mercedes-Benz, the luxury division of General Motors Co. unveiled its new ATS small sedan at the North American International Auto Show in Detroit.

The ATS will battle in the most crowded segment of the luxury market, facing off against a new version of the BMW 3 Series, the perennial leader, and competent rivals including the Infiniti G, Lexus IS and Mercedes C Class.

PHOTOS: Highlights from the Detroit Auto Show

"People who buy the BMW 3 Series are probably some of the most educated and savvy buyers in the U.S. These people know how good the car is," said Mark Reuss, president of GM North America.

That's why Reuss has paid more attention to the ATS than any other project at the automaker. It's been designed from the ground up, and he said it would match or beat the driving characteristics of any rivals, including the BMW.

"It is strategically a very important product for Cadillac," said Ed Kim, director of industry analysis at AutoPacific Inc., a Tustin automotive consulting firm. "Cadillac wants younger buyers to come into the fold, and they hope to move them up through the brand."

Brad Willingham, co-owner of Boulevard Cadillac in Long Beach, is eager to get the ATS in his showroom.

"It will be very exciting," Willingham said. "To have a vehicle that appeals to a whole new group of people is a dealer's dream."

But he's mindful of Cadillac's past failures.

"This is a car segment that Cadillac has never had success with," Willingham said.

Indeed, Cadillac's first two attempts at the same strategy weren't pretty.

First there was the Cimarron, a rebadged Chevrolet Cavalier with fancier paint and upholstery that came out for the 1982 model year. Largely panned and a poor seller, no one ever mistook a Cimarron for a Mercedes. It was retired after the 1988 model year.

Cadillac tried again in 1997, introducing the sport Catera. This time at least, Cadillac was competing against the Germans with a German car. The Catera, an Opel Omega rebadged for U.S. sales, drove competently but was tripped up by reliability problems and a lack of appeal to Cadillac's aging customer base.

Reuss said Cadillac would get the car right this time.

First, it is building on a brand-new rear-wheel-drive platform. This isn't another case of looking at what's in the parts bin, slapping it together and polishing it up with a Cadillac paint job and name badge.

"If we are passing off cars that are built from other existing platforms, this won't work," Reuss said.

GM is bringing a new engine to the fight: a 2-liter, turbocharged four cylinder that will produce 270 horsepower. Cadillac will also offer a normally aspirated 2.5-liter, four-cylinder engine and a 3.6-liter V-6 engine in the ATS.

Like the BMW, the ATS will have a 50-50 weight distribution that will enhance handling and road feel, giving it the sporty character it needs to make its case as a true sports sedan, Reuss said.

GM is building the frame out of aluminum, various types of steels and magnesium to keep the weight under 3,400 pounds — about 100 pounds less than its Audi A4 and Mercedes C Class rivals — and improve performance.

"It is fair to say that lightweight is not a word that could be applied to previous Cadillacs," Reuss said.

Cadillac needs to generate robust sales from the small car if it is to close the gap with the current luxury leaders.

BMW topped the field last year with U.S. sales of 247,907, knocking longtime bestseller Lexus from its 11-year reign as the luxury leader. Mercedes was a close second with sales of 245,231, and Lexus dropped all the way to third at 198,552.

Cadillac placed fourth by selling 177,633 vehicles in the U.S. last year. The top seller was its SRX sport utility vehicle. The CTS sedan was second.

But the CTS "has always been a tweener from a size standpoint, and that has been a problem for us," Reuss said.

Although it's bigger than a BMW 3 Series, it didn't quite match up with the larger 5 Series and the Mercedes E Class, and that presented marketing issues for Cadillac.

"We had trouble pricing it and discussing the performance of the CTS," Reuss said.

The ATS now will allow Cadillac to grow the size of the CTS to better compete with the larger sedans and have a car at the all-important entrance price of the luxury segment.

A broad range of sedans and SUVs allowed BMW to catch and then surpass its rivals.

Reuss has said that ATS pricing would be competitive with its rivals. The lease deal on the ATS will be crucial to its sales success because unlike other parts of the auto market, the majority of buyers at the entrance to the luxury category are lease customers, said Jessica Caldwell, an analyst with auto information company

Analysts believe that Cadillac has a good shot of using the ATS to attract new buyers and grow.

"Cadillac has a latent market," said Sasha Strauss, managing director of brand strategy firm Innovation Protocol. "There has not been an American choice that says something about my ego, my success in life, my lifestyle."

PHOTOS: Highlights from the Detroit Auto Show

Cadillac has smartly adopted a styling that is edgy and sharp when many of its competitors have stuck with European curves, he said.

"That means that Cadillac is on the brink of being a signature of self-expression and a cause for rebellion," Strauss said. "It is becoming a fist in the air at German design."