CARMEL VALLEY, CA – The ’08 Cadillac CTS features a litany of improvements over the sports sedan’s previous generation, including a more powerful direct-injection gasoline V-6 and a wider chassis for better driving dynamics.

But the vehicle’s redesigned interior might rank as the car’s most significant upgrade.

“The interior is vastly improved,” says Erich Merkle, vice president-forecasting for IRN Inc. “It has a beautiful flow to it – the materials, the ambient lighting. If it doesn’t get your heart going, you’re dead already.”

That’s music to the ears of Eric Clough, lead designer for the car and the man widely known for his work inside the celebrated Cadillac Sixteen concept that bowed at the 2003 North American International Auto Show in Detroit.

But while the exterior of the CTS borrows a number of design elements from the concept, including its distinctive dual-textured grille and sharp centerline, the vehicle’s interior puts a modern spin on the Sixteen’s cabin.

“The Sixteen’s interior was actually quite retro,” Clough says during a media backgrounder for the ’08 CTS here. “The bigger story from the Sixteen is really the whole coach-built approach – the leather wrapping and the way it works with the metal parts. That is philosophically where we’re going to go with Cadillac interiors.”

The philosophy, which recalls an era when Bentley, Rolls-Royce and Cadillac models were hand fabricated, first appeared with a cut-and-sew approach on the ’07 Cadillac SRX cross/utility vehicle.

“We have a lot of experience now with the cut-and-sew method, and it gives us a good foundation for future products,” says Clough, a GM designer for more than 20 years.

Distinguished by its decorative French stitching, the cut-and-sew method appears on components throughout the CTS interior, including the instrument panel, center console and door trim. Although an automated process performs the cuts, the stitching is done by hand at Drexel Meyer, which also supplies the service for Daimler AG’s Maybach ultra-luxury line.

GM, however, stops short of wrapping the components in leather. Clough calls that a luxury reserved for a platinum-edition vehicle or perhaps the high-performance CTS-V due in ’09.

However, GM does abandon the cheaper, molded cloth used previously in favor of a rolled variety found on some of Germany’s more premium vehicles. And unlike many of those models, the CTS offers the combination of cut-and-sew and rolled cloth at every trim level.

“If you step into the base car, you still have a rich experience, and it doesn’t look like you’re cutting corners anywhere,” Clough says. “We’re smarter with how we use materials, more conscious of how we spend our money and what we spend it on.”

A case in point is GM’s more thoughtful approach to the type of wood trim used and how it is employed. Clough says the CTS team was cautious about overusing wood, a design element he says makes more of a luxury statement and could detract from the car’s sporty theme.

As with the Eucalyptus GM chose for the XLR roadster, the genuine Sapele Pommele of the ’08 CTS features a shimmer and grain direction nearly impossible to imitate, he says. A flatter, denser walnut burl contains more non-directional grain, which makes it a popular wood simulate and cheapens the use of even authentic grades.

“There’s so much activity in Sapele, when you swing the door open and the sunlight goes across it, it just comes alive,” Clough says. “And the fact that the parts and piece don’t all look exactly the same is a plus, because then you know it’s the real deal.”

The new interior also wraps around its passengers more completely, mimicking the “cockpit feel” of its performance luxury competitors. Each interior component – from the center stack to the instrument panel to the console and outward to the door panels – blend seamlessly.

“There’s no substitute for flowing elements, and the major sporty attribute is the cockpit feel,” Clough explains. “You get that feel through continuity around the driver. That’s a big deal.”

Smaller, but equally thoughtful design touches grace the interior. For example, the integrated center stack, available with either a satin metallic finish or Sapele, contain Cadillac’s familiar centerline break, an element Clough considers critical to the brand and essential to marrying the exterior and interior design.

“It’s part of our brand character. It’s analogous with the exterior and carries that form vocabulary inside,” he says.

In addition, heating and cooling vents on the new CTS add bright work and discard the technical look of previous models, while their shape hints at the car’s stacked rear taillamps that recall Cadillac’s design heritage. In another nod to Cadillac’s past, V-shaped medallions, or “chevrons,” appear on backs of the front seats and serve as a push grip on the retractable center console tray.

The ’08 CTS also forgoes the Spartan instrumentation of its predecessor. Analog mechanical gauges are tightly contained in three tubes ornamented with bright work, while the addition of infotainment options, such as iPod and MP3 capability, means more buttons for the center stack.

Clough says his design team toiled over how to present the technology, deciding finally on an approach that divides controls for such systems as infotainment, navigation and heating, ventilation and air conditioning into three groups. The final design incorporates buttons, a touch screen and center dial similar to BMW AG’s iDrive.

“We try not to let marketing clinics determine our direction, but our initial designs took a real Bang & Olufsen approach to hide the technology,” Clough explains, referring to the Danish audio-system maker known for its modern, clean designs. “But we got strong pushback from customers who wanted to see their technology.”

Clough says his team found a middle ground between iDrive, a system that combines many controls but has been criticized for its complexity, and the approach of Audi AG and Nissan Motor Co. Ltd.’s Infiniti, which rely more on individual controls for each function.

“We think we arrived at a functionality and interaction that’s better than all of them,” he says.

Reflecting another industry trend, ambient lighting debuts on the ’08 CTS, as well. GM positions the light-emitting-diode backlighting in the door pulls, foot wells and recesses between the upper and lower instrument panel. The result is more visual than functional, admits the auto maker.

“It’s indirect, it’s subtle, but it’s crisp,” Clough offers. “It’s just enough to give you a little ambient light, but not distract you. And in the foot wells it gives you that feeling of spaciousness, especially for the rear occupant who has a more confined foot space.”

Rear occupants in the new CTS also will enjoy better forward sightlines, as GM switched suppliers and opted for a more compact, tapered seat frame from Faurecia SA. Lear Corp. adds the foam and trim.

In addition to more perceived spaciousness, the thinner seatback also makes up for less couple distance – the length from front seat hip to rear seat hip position – when engineers moved the front and rear axels forward to trim the exterior’s front overhang. The new seats also look sportier, Clough says.

“Anything athletic tends to be more compact, and there’s a lot of shape to the seat now,” he says. “The bolsters are more sculpted, whereas the previous seats were more luxurious but more blocky. So the sculptured aspect of it makes it more sporty.”