GM has not released official photos of the Cadillac ATS... GM has not released official photos of the Cadillac ATS, but has been teasing it in ads like this one shown here, where a blue ATS can be seen peeking out from under its cover (GM).

Cadillac’s announcement of the ATS small sedan coming in 2012 is acknowledgment that the General Motors luxury brand won’t stand pat as an also-ran to Mercedes, BMW and Lexus. To run in that pack, the industry’s onetime luxury leader needs more models and variants, especially at the entry level.

GM isn’t talking much in detail about ATS, though this much is known: The car will be built on a new rear-wheel-drive architecture, dubbed Alpha and laden with lots of aluminum to make it lighter, quicker and more agile than had it been adapted from the current CTS architecture. GM also plans to build the next CTS on Alpha, as well as the next Chevrolet Camaro.

Cadillac will initially offer a sedan version of the ATS, as well as a coupe and a convertible, though the decision hasn’t been made whether the convertible will be cloth or a retractable top. A station wagon is also under consideration. Power is rumored to come from a turbocharged four-cylinder or V6, with the possibility of a V8 under the hood in a performance V-Series version.

A New Recipe

In 1999 GM began a thorough overhaul of the Cadillac brand, starting with new design themes and a deliberate strategy for the CTS sedan. It was BMW 5 Series sized, but sold at 3 Series prices, so that even if it wasn’t a legitimately competitive product, it still offered a good value proposition. While the second generation CTS, unveiled in 2008, largely remedied the technical deficiencies, the car has still lacked in prestige.

GM will be faced with a similar challenge with the ATS: Simply designing, engineering and manufacturing a car that can compete with the BMW 3-Series, Mercedes C Class or Lexus GS in terms of performance won’t be enough. GM’s new marketing guru, Joel Ewanick, must find and stimulate the creative energy to endow Cadillac with as much desirability as its German and Japanese counterparts.

The task of making up that ground for Cadillac goes to the Minneapolis-based agency of Fallon Worldwide. Ewanick awarded the business to Fallon in July, reuniting with an agency he employed on behalf of Porsche 20 years earlier. Having just launched Chevrolet’s “Chevy Runs Deep” campaign, Ewanick is likely to focus more attention on Cadillac, which is bringing out a front-wheel-drive large sedan called XTS in 2011.

"Cadillac consideration already is up for luxury buyers, and the ATS will bring it more for the core younger group of luxury buyers,” said Jim Hall of 2953 Analytics in Birmingham, Michigan. "This car will be about handling and image more than comfort. GM is letting Lexus have that."

Young male buyers in the U.S. aspire to own BMW 3 Series more than any other brand in its class, a reflection of BMW’s carefully crafted image of high-end sportiness and performance. Mercedes advertising appeals to a sense of luxury, style and exclusivity, reaching a more female audience than BMW. Cadillac’s struggle has been to define what it wants to represent, and then identify and touch the emotions of the people who can afford to buy its products.

No Track Record

The last attempt at an entry-level Caddy in the U.S. market was a flop. In the late 1990s Cadillac tried to market the Catera, a thinly disguised Opel Omega imported from Germany. Memorable only because GM used a duck named Ziggy as the car’s mascot and paid supermodel Cindy Crawford a fortune for her endorsement, the car was neither competitive with the 3 Series nor compelling on its own. More recently, Cadillac introduced the BLS for the European market, an entry-level model based on the Saab 9-3; it turned out to be an even greater failure.

Even if ATS is a good enough car to be a hit, it will enter a crowded and mature landscape. Nissan has been trying to beat the 3 Series at its own game with the Infiniti G37, a car that some critics contend is at least equivalent in performance, yet sells for far less. Audi has gotten serious about challenging BMW on every level, from performance to features to price, with its newest A4. Then there are a whole slew of interlopers, like the Acura TSX and GM’s own Buick Regal, cars that cannot compete head to head with the 3 Series, but sell for so much less that they steal some of the more parsimonious entry luxury buyers.

For ATS to stand a chance, the achievements of Cadillac’s marketers and advertising agency will have to at least match those of the car’s engineers and designers.

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