The powerful new XLR is a radical departure from the traditional Cadillac.

General Motors Corp.'s (GM) luxury division has opened a new assembly plant and launched an unprecedented number of new vehicles over the last three years. But now it’s time to pay the piper as GM must begin to repay the billions of dollars those projects cost.

Meanwhile, it will launch another vital car and prepare its top-selling sedan for what could prove to be a chancy face-lift.

Cadillac plans to replace the popular front-wheel drive Seville, with the rear- and all-wheel-drive STS in 2004. It also will redesign its best-selling car, the more traditional DeVille, in 2005. The redesigned DeVille will walk a tightrope as it tries to keep its appeal to an older, more-conservative customer looking somewhat like the angular new generation of Cadillacs, while retaining its front-drive layout.

According to Cadillac general manager Mark LaNeve, this is what he termed a product-driven “renaissance." "We made a big bet with a new design and that our engineers could deliver world-class vehicles. That's starting to pay off for us, but we fully realize we have a lot to do. We must execute the plan over time and with the next generation of vehicles."

Cadillac has witnessed sales grow from a near all-time low of 170,379 units in 1996 to 199,698 last year. That growth was driven by Cadillac’s move into new market segments ranging from the luxury Escalade SUV to its CTS sport sedan. Cadillac sales rose another 5.7 percent through September of 2003, to 153,680, as sales of the new SRX crossover wagon and XLR roadster began.

Those numbers are still anemic when compared to Cadillac's 1978 record of 350,813. But sales are headed in the right direction after years of decline caused by the an aging market demographic, the fuel crises, downsizing, quality problems, competition from overseas and plain poor performance on the road.

The new models are a symbolic rebirth of the brand that touted itself as "the standard of the world" from the introduction of the first V16 car in the 1930s through its heyday of tail fin-bedecked cars in the '50s and '60s and well into the land-yacht era of the 1970s.

The high-performance STS sedan will replace the aging Seville with a somewhat rounded version of Cadillac's edgy new look. The exterior will be wrapped around sophisticated technology and rear- and all-wheel-drive.

"The STS needs to be a car that makes people say 'Wow,' " said Jim Hall, vice president for industry analysis at the Southfield office of consultant AutoPacific.
The strategy is basically to build and market two types of Cadillac according to LaNeve. One is a global product like the CTS and XLR that can sell anywhere on Earth, and the North American products, like the Escalade and DeVille.

The STS, which scraps the Seville's front-wheel-drive layout in favor of rear- and all-wheel-drive models, fits squarely in the global category.

"The STS will be bigger than most of the cars in its segment," LaNeve said. He optimistically promised size and features comparable to a $70,000 BMW 7-series at a price closer to the $40,000-plus midsize 5-series.

The STS will come with V6 and V8 engines, and fully optioned models probably will cost more than the Seville. It has a top suggested retail price of $52,445, according to Edmunds .com, a Web site that provides information about car prices.

The STS may have the biggest challenge as Cadillac attempts to keep current owners while also going after the BMW 5- and 7-series sedans noted for their performance and cutting-edge design and technology.

Meanwhile, Cadillac hopes to make the big DeVille sedan look like other models without alienating current owners. The new body style will pick up Cadillac’s new look, but be recognizably a DeVille. LaNeve said the big sedan's midlife face-lift will call for an exterior that's clearly related to the CTS and STS, but in a milder form. The car's name will change to DTS, but it will remain front-wheel drive and the price will remain in the $45,000 to $50,000 range, he said.

It will also get totally new electronics and an interior design will build upon the XLR roadster, a model that successfully combines Cadillac's edgy exterior look with softer and more luxurious materials than the CTS and SRX.

Cadillac will keep its options open for the next all-new DeVille, expected around 2008.