Cadillac has yet to show a public version of the small ATS, but has hinted at where it's going on the big-car front with the XTS Platinum Concept.

More than a year after teasing  a select group of media with a look at a proposed small car, tentatively dubbed the ATS, Cadillac will this week announce plans to put the new model into production at a plant near Lansing, Michigan.

The sedan, smaller than the current Caddy CTS, will be aimed at the likes of the BMW 3-Series and Mercedes-Benz C-Class, and could be used as a replacement for the only marginally successful BLS Cadillac had hoped would give it an entry into the lucrative European luxury car market.

“We usually don’t comment on future products but we have said we will offer a new product positioned below the CTS,” said Cadillac spokesman Nick Twork.

And while it has not officially confirmed the reason for his visit to the Lansing plant, General Motors has announced that new CEO Dan Akerson will tour the facility, along with Michigan Governor Jennifer Granholm, on Thursday.

Based on the same platform – and produced on the same assembly line as the current Cadillac CTS and STS models — the ATS will serve as a cornerstone of General Motors’ efforts to rebuild the once dominant Cadillac brand.  The demand for small luxury and entry-luxury models has been rapidly growing, leading makers like BMW and Mercedes to push into downsized segments long ignored by luxury brands.

Such models as the BMW 1-Series and Audi A2 are proving especially popular in Europe, though there is growing demand even in the United States, where luxury has traditionally been measured by the foot and inch.

That’s not to say Cadillac is abandoning the upper reaches of the market.

The maker’s current large cars, the DTS and STS, have largely failed to generate much enthusiasm.  But Cadillac is planning to strike back with an alternative offering based on the well-received XTS Platinum concept vehicle that debuted at the North American International Auto Show, last January.

The new models, both ATS and XTS, underscore Cadillac’s commitment to the so-called Art & Science design philosophy, though the maker is looking for ways to better distinguish individual models.  Part of the problem Caddy faced with the slow-selling STS is that it looks too much like the smaller CTS model – and doesn’t offer enough differentiation in terms of room or refinement, either.

An offering like the ATS would give Cadillac further ammo in its battle against now-dominant imports like BMW, whose 3-Series is a benchmark in the compact luxury segment.  The CTS is a larger vehicle, closer to the German maker’s 5-Series.

That would be particularly advantageous in Europe, where even the 3-Series is now considered a relatively large model.  Cadillac tried to crack the Continental code with the Saab-based BLS, but to relatively little success.  And, with Saab sold off, the American maker sees the need to go it alone.

What’s unclear is whether the ATS nomenclature will transfer from concept to production car.  “The alphabet soup (approach) can be problematic,” conceded a GM source, pointing to the confusing alphanumeric badging at brands such as Lincoln and Acura.

On the other hand, the approach has generally worked at BMW and Mercedes, largely because the names have relatively clear meaning.  It’s easy to follow the progression from a BMW 1- to 3- to 7-Series, and even at Mercedes, there’s a clear stairstep from the tiny A- and B-Class models to the C-, E- and S- sedans, coupes and cabriolets.

So, with Caddy, A- would likely remain a clear option under the bigger CTS.  With “so much baggage,” a return to more classic Cadillac names appears to be ruled out.

As for timing, production of the ATS, “is not on the immediate horizon,” a second GM source cautioned.  At the earliest, it appears, production would not be likely until sometime in 2012.  The street version of the big XTS would likely follow shortly afterwards.