The 2013 Cadillac ATS (Credit: Autoblog).
It's the Cadillac of compact cars: The 2013 ATS. Not long ago, that would have been an insult to compact cars.

Cadillac, for all of the luxury and performance the name denotes, has had an image problem. It's had one for decades. Once the aspirational brand for the world, it slowly moved away from iconic to geriatric. But the all-new ATS sedan could well be the car that re-establishes Cadillac as a viable choice for a new generation of financially successful car buyers, as well as attract some of the previous Caddy owners who have defected to other brands.

The Crest & Wreath for much of the last thirty years has lacked genuine luxurious qualities, and provided only mediocre performance. Through the '80s and '90s, Cadillac became the car your grandfather drove and one you swore you never would. It was more likely to appear in Sports Illustrated "Where are they Now?" edition than your driveway.

Building an image one mile at a time

But about 12 years ago, something happened. Cadillac checked itself into rehab. It shed some weight and gained some moxie based on product instead of reputation. Ever since, it's been taking things one mile at a time, improving with every offering. And more people are beginning to take notice.

Before the new ATS came the CTS. Then, we saw an even better CTS. (Next year, will come an even better CTS.) But the brand isn't a one trick pony car. For better or worse, Cadillac's flagship model is the Escalade, a giant vehicle that has managed to seduce the affluent with its size (it's huge) and sumptuous interior. And the SRX, a highly capable and luxurious crossover with one of the best all-wheel drive systems available from any carmaker, continues to lead sales for the reinvented brand. The XTS sedan just arrived, and it too looks like it will put Cadillac on shopping lists that have never before included Caddy.

The ATS will arrive in showrooms next month with a lot of expectations on its hood. Cadillac needs this car to go head-to-head with the likes of the BMW 3 Series, Audi A4 and Mercedes C Class in a war of American know-how versus German engineered excitement. The ATS arrives in three versions, each loaded with niceties.

From the base model 2.5-liter direct injection four-cylinder ATS to the premium 3.6-liter DI V6 model that provides 321 horsepower, the ATS is a driver's car that anyone can toss through corners, cruise down the highway or have a Sunday drive that includes the word "exhilarating."

Rear drive at last

The ATS earns those chops with an all-new rear-wheel drive platform that incorporates a lightweight design--it weighs just 3,400 pounds--and a 50/50 front to rear weight ratio that allows you to push this car through hard corners and tight turns. Rear-drive is key. BMW and Mercedes-Benz have built reputations and loyal followings on the rock-steady handling of their rear-drive cars. Cadillac can do the same. The Germans may have eaten Cadillac's lunch for a few years, but the ATS wants to take it back.

While driving the ATS on a track in Georgia last week, the ATS packed more smiles per cubic liter than any car I've driven this year. The 2-liter turbo-charged model that cranks out 272 horsepower and 260 pound-feet of torque especially impressed me. This car was infinitely tossable, with taut steering that held its lines through every turn. There is no sawing the wheel like a lumber jack in an attempt to hold onto a corner, or the lack of feedback and never feeling the road that ruined Cadillacs of yore. The ATS felt like its German contemporaries: Confident, clean and powerful.

The vehicle's driving dynamics are well balanced at any speed we reached on the speedometer. For the most advanced models, engineers included "Magnetic Ride Control," which allows the car to adjust its shocks to the road in five milliseconds. To give you an idea how fast that is, if the ATS is driving at 60 mph the car can evaluate the road literally every inch. It can completely change the shock's feel from hard to soft in the span of 5 inches. Before a tire could drive over the length of a dollar bill, every setting can change and provide the driver with a clean, smooth ride. This is what micro-chips and micro-processors hath wrought on our rides.

As for the car's ATS exterior, there are pluses and minuses. If you don't like Cadillac's styling of late, you won't like the ATS. But the distinctive family appearance makes a statement. The big open grille and high-intensity headlamps with a sliver of glass that stretches halfway back from the quarter panel help it to stand out.

The wheels are pushed out to the corners like they should be for a good sport sedan, and the ATS has a confident stance on the ground. The 17-inch wheels look a little small, but there are optional 18-inch wheels. The best parts of the exterior include the crisp lines on the car's sides and the tall lamps that Cadillac has reclaimed as a signature mark. The advantage to the family design, like it or not, is it makes every Cadillac easy to recognize. It remains conservative without too much flash from any particular angle. But there's a muscular attitude new Cadillac's possess that instills confidence for anyone hopping behind the wheel.

Under the hood

On the road, all three models perform well, but have different driving characteristics. The base model tends to whine a little too much for my liking when it's pressed hard into service. The 202 horsepower four-cylinder engine provides enough power, but it just works a little harder than the other models.

The 3.6-liter model has gobs of horses under the hood and a great launch, but it also feels heavier than the others on the road.

The turbo version was the baby bear of the Cadillac ATS: Just right. On the highway, it was quiet. On the curvy roads near Atlanta, it felt precise and well planted as it growled. Cadillac rightly expects this model to be its top seller. It's certainly the one I would buy.

The six-speed automatic transmission was extremely smooth and engineers calibrated it nicely on all three versions. The transmission in general has become a little over calibrated on many cars, forcing a vehicle into sixth gear too quickly in an attempt to improve a car's gas mileage. The ATS transmission holds gears well and seems to anticipate the driver's next move better than most. It enhances the experience instead of hindering it. A six-speed manual is available on the turbo mode and a manual override on some models is available to provide manual shifting on demand.

Inside the cabin

Inside the ATS is all luxury. The leather seats are comfortable for the daily commute and long weekend drives. Every touch point is soft and every piece feels well crafted. The instrument gauge is clean and well lit, making it easy on the driver's eyes. The genuine wood trim is elegant, and the optional carbon fiber or metal trim adds a much more modern look to the ATS. There was nothing I didn't like inside this car, including the second row that provides ample legroom for up to three passengers.

And then there's Cadillac's infotainment system known as CUE. It's one of the best systems available complete with an 8-inch touch screen and more connectivity options than a Google office. It can connect via Bluetooth, USB jack or SD card reader. The screen is easy to navigate and the hard controls on the center stack below the screen only require the driver to touch the raised bar on it to activate a control. It took just ten minutes to get accustomed to the system and even less time to connect my iPhone to it.

There are also some neat features such as the lifting screen to expose a space behind the head unit to store things like your phone. (There's also a USB plug back there to keep your phone charged.) The capacitive touch creates a sense that you've touched a button on the screen and is key to providing feedback to a driver and helping cut down on distracted driving. The system is so good, expect other car makers to copy it.

The voice recognition system worked very well, easily recognizing commands and allowing me to make phone calls without ever taking my hands off of the wheel.

Most of all, the ATS undercuts BMW and Mercedes by thousands of dollars, making it a viable option for consumers looking for something new and different. It has a starting price of $33,900 including destination. Consumers should flock to it. In time, they will.

However, many luxury car buyers still don't have Cadillac on their radar. Their prejudices from the past cloud their vision of the present. To them, the ATS will be a total surprise because of its superub performance, 33 mpg highway capabilities and luxurious interior. Cadillac's road to recovery began more than a decade ago, the ATS just continues it.

The ATS is an overnight success, 100 years in the making.

Bottom line: Cadillac targeted the BMW 3 Series and created a legitimate contender. Good show.

Autoblog accepts vehicle loans from auto manufacturers with a tank of gas and sometimes insurance for the purpose of evaluation and editorial content. Like most of the auto news industry, we also sometimes accept travel, lodging and event access for vehicle drive and news coverage opportunities. Our opinions and criticism remain our own — we do not accept sponsored editorial.

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