As a more aggressive, streamlined company emerges from the ashes of General Motors, the fallen giant’s four remaining brands are adjusting strategies for their next generation of vehicles. The primary challenge is to comply with forthcoming stringent emissions and fuel-economy standards while still continuing to rebuild and define the brands’ images. This of course includes Cadillac, whose resurrection as an internationally respected, desirable luxury brand may be GM’s most remarkable recent achievement.

XTS Will Not Replace DTS—It Will Fight the Lexus ES

If everything goes to plan, Cadillac’s future sedan lineup could look more conventional, as the brand has stated its desire to avoid “tweener” cars such as the current CTS, which competes with both the BMW 3-series and 5-series. The new sedan strategy would encompass the following models: a full-size flagship to replace both the STS and DTS; an all-new, appropriately sized 3-series fighter; the CTS, which would be freed up by the smaller car to truly gun for the 5-series; and a mid-size Lexus ES competitor to be called the XTS.

But there have been obstacles. A large rear-wheel-drive sedan based on the Australian Zeta platform, which underpins the Chevy Camaro and soon-to-die Pontiac G8, was the most prominent casualty of tightening fuel-economy standards. The platform would have made an excellent top-of-the-line sedan for Caddy, but its weight and rear-drive layout aren’t particularly efficient. The project, internally dubbed DT7, is basically dead.

With that project’s demise and with the Northstar engine—and the DTS and STS models that use it—going out of production next year, a significant gap will need to be filled at the top of Cadillac's lineup. Cadillac recognizes the need to offer a vehicle above the CTS; one insider says the brand wants to avoid becoming the "CTS brand.” That flagship, our sources indicate, could be derived from the SLS, a stretched STS sold in China. For U.S. duty, the car would be reskinned and use a version of GM’s small-block LS V-8. This makes some sense, as a rear-drive eight-cylinder car on the Sigma architecture would be a better competitor to the German heavyweights than a soft-riding car based on some version of the Epsilon platform—which underpins the Chevy Malibu—as other reports have indicated.

But that car will exist. Rather than be a large STS/DTS replacement, however, it will be a slightly down-market, plush, front-drive (or front-drive-based AWD) model that Cadillac will build on a stretched Epsilon platform. This sister model to the Buick LaCrosse is currently under development, and will be offered with normally aspirated V-6 engines. It will clearly emphasize comfort over dynamics, in the mold of the Lexus ES, and will be the same size as the ES, too. This car, which will probably be called the XTS, will begin production at GM’s Oshawa, Ontario, plant in late 2011.

Gunning For the 3-series In Earnest?

More exciting, we think, is a compact rear-drive sedan positioned below the CTS and built on the on-again/off-again rear-drive Alpha platform. This sedan would be a true BMW 3-series competitor, and we'd love to see it make production. But it could still be derailed by cost; the Alpha platform is reported to cost nearly as much to produce as the Sigma platform used by the CTS, and a previously planned cost-amortizing Pontiac variation obviously is off the table. While we think using a shortened Sigma platform would make the most sense, we actually hear that Bob Lutz—who will fully retire from GM at year’s end—is championing scrapping the Alpha platform for an all-wheel-drive variation of the Delta architecture, which houses the Chevrolet Cruze and the next-gen Opel Astra. But such a Cadillac spun off the Delta platform would be awfully close to the BLS—a.k.a. the "Bob Lutz Special"—the infamous first-generation Epsilon derivative that completely bombed in the European market.

The next-gen CTS, Cadillac's core model, will come after all the above. Cadillac aims to grow the CTS slightly for its third iteration, placing it even more firmly in BMW 5-series territory. Before that, however, the stunning coupe version of the current CTS will debut this year, with a high-performance V variation arriving shortly thereafter.

Smaller Escalade Coming, Cadillac City Car a Possibility

There’s news regarding the rest of Caddy’s lineup, too. Like the just-launched 2010 Cadillac SRX, the highly profitable Escalade will be downsized for its next generation. Expect the flamboyant SUV to become slightly smaller but somewhat more sophisticated as it migrates to the Lambda crossover platform, which it would share with the Buick Enclave and Chevrolet Traverse, among others.

On the other end of the size spectrum, an aggressive-looking, front-wheel-drive city/commuter car is being discussed. Design proposals for this "premium small-car project" have been created for various GM brands, and they’ve all been described to us as stunning, with the Cadillac version in particular standing out. The project would be appropriate for the times—and could perhaps help repair Cadillac’s BLS-tarnished rep in Europe—but GM hasn't yet figured out how to make it profitable.

The slow-selling XLR roadster, Cadillac’s de facto halo car and one of the first production vehicles to wear the brand’s Art and Science design language, will not get a replacement. It joins the Allanté in the dustbin of respectable but ultimately unloved Cadillac two-seaters. Instead, expect the Chevrolet Volt–based Converj plug-in hybrid to serve as the brand’s halo if it reaches production, thanks to eye-popping styling, relatively low production numbers, and lofty fuel-economy figures.

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