DETROIT – General Motors tried once before to challenge luxury king BMW when the Cadillac CTS arrived in 2002 with edgy styling, confident handling and enough technology and performance to earn at least a second glance from sport-sedan buyers.

The CTS reshaped Cadillac’s design language and can be considered a success, even though 2011 sales lagged the BMW 3-Series nearly 2-to-1.

Today, Cadillac is not satisfied with nibbling around the edges of the highest-volume luxury segment in the U.S. This summer, the new ATS arrives with a mission to take on the vaunted 3-Series in a head-to-head matchup.

It will not be easy, as an all-new 3-Series arrives about the same time with fresh sheetmetal, state-of-the-art engines and handling that is expected to uphold the legacy of the “ultimate driving machine.”

But the ATS has the advantage of aligning much more closely with the 3-Series in terms of dimensions and curb weight. The CTS was and is a “tweener,” slightly larger than the 3-Series but smaller than the 5-Series. The ATS is 8 ins. (20 cm) shorter than the CTS.

“The new ATS will be the most mass-efficient car in this segment,” proclaims GM North America President Mark Reuss at Sunday night’s unveiling.

“We resisted the impulse to expand and grow the car on the outside,” he says. “We intend for it to be not just a compelling new challenger, but a winner. We will win with this car once again.”

The powertrain offerings for the ATS demonstrate a savvy attempt to meet every conceivable need in the luxury segment. All three gasoline engines have dual overhead camshafts and variable-valve timing and will use high-pressure direct injection.

A diesel will come to the U.S. within the ATS’ first lifecycle, Reuss says.

The base engine is a 2.5L naturally aspirated 4-cyl. rated at 200 hp, while a new 2.0L turbocharged 4-cyl. will achieve 270 hp. The top offering is GM’s proven 3.6L V-6, expected to produce more than 320 hp.

Cadillac has not offered a 4-cyl. engine since the Cimarron ended eight illustrious years in the lineup in 1989.

The turbocharged I-4 should be more than adequate, with output that tops similar 4-cyl. offerings from BMW, Audi and Mercedes.

Fuel-efficiency ratings for all three engines are yet to be announced, but GM says the 2.5L will achieve the highest fuel economy in Cadillac’s history, well above 30 mpg (7.8 L/100 km).

All-wheel drive will not be available with the 2.5L but will be offered with the other two engines.

The 2.5L is the wildcard: None of the German giants in the segment offers naturally aspirated I-4s. The 2.5L also appears in the ’13 Chevy Malibu and is expected to be rated at 190 hp in that application.

Still, David Leone, GM’s global vehicle line executive for global RWD and performance cars, says the 2.5L “absolutely” is up to Cadillac’s challenge of taking on the segment’s best.

Tuned for fuel efficiency, it will give conservation-minded buyers a viable alternative. Leone also tells WardsAuto that “competitive intelligence” suggests BMW will offer a 2.0L naturally aspirated 4-cyl. in the U.S. in coming years. However, BMW officials here for the auto show say there is no such plan to bring a naturally aspirated 4-cyl. to the U.S.

Pricing of the new ATS will be “competitive,” says Don Butler, Cadillac’s vice president-marketing. “We intend to go right at the leaders that established what the category’s all about.” With an advanced lightweight multi-link independent rear suspension, aluminum hood, extensive use of magnesium and a sophisticated telematics system, Butler says the ATS will command a price in line with others in the sector.

“We did this vehicle with premium engineering and materials to deliver exactly what customers want in the segment, and we believe they’re willing to pay the price for it.”

He says the ATS was designed specifically for its mission.

“We could have taken another vehicle and massaged it and tried to turn it into a Cadillac. We could have taken the CTS and tried to take mass out,” Butler says. “But the fact is, we would not have been able to win.

“For these customers that want fun-to-drive, want nimble, want styling dynamic to the vehicle as well, a purpose-built architecture made sense in this case.”

With such forceful language, the ATS is shouldering enormous expectations. The launch must be flawless and all the technology must work because GM will have some explaining to do if sales should fall short of the 3-Series.

Butler declines to predict ATS sales in its first full year of availability, but he says the car will become Cadillac’s highest-volume model.
Cadillac sold 152,389 vehicles in the U.S. in 2011, according to WardsAuto data. Sales of the BMW 3-Series, alone, totaled 100,910 units.