The entry-level luxury market has been completely flooded with itty bitty Teutons as of late, from the Audi A3 to the Mercedes-Benz CLA to the BMW 2-series. And that's a problem for Cadillac, because they want to win the luxury war, and they're haven't been fighting that battle. Yet. And that's going to change.

Cadillac introduced a new entry-level model just a few years ago, in the form of the Cadillac ATS, but the ATS itself isn't near entry-level enough, according to new Cadillac CEO Johan de Nysschen in an interview with the Automotive News:

Cadillac is developing a car that would fit below the ATS, de Nysschen said, declining to put a time frame on its arrival.

Unlike the front-wheel-drive layout of the CLA — which is less expensive to develop and typically allows for more interior space — Cadillac plans to build its future entry-level sedan on the same rwd platform that underpins the ATS, codenamed Alpha.

"The cost and packaging advantages of front-wheel drive are appealing. But Cadillac is the challenger brand," de Nysschen said. "We want to build our reputation as a purveyor of high-performance drivers' cars … so it's better that we do it off a rear-wheel drive architecture."

The main issue comes down to two significant issues – price, and size. The ATS is a relatively small car, but it doesn't have a lot of back seat room. At the same time, it costs a couple of grand more than the Germans, which all start around roughly $30,000, and are even smaller. So if you're going to be sacrificing back seat room anyways, why not go for the cheaper option?

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So that's the Cadillac conundrum at the moment, and why we'll probably see a smaller one on the horizon.

And though you may have horror-filled nightmares of a Cadillac Catera dancing around your head, something tells me our futures will not be so terrifying as our collective automotive past. Cadillac's a much different company now, and a much better company.

Also, did you miss the part about rear-wheel drive? Rear wheel drive! That can't be so bad. I hope.