Cadillac is in the midst of reworking its lineup of passenger cars. There’s a new CT5 under way to split the difference between the current ATS and CTS, effectively replacing the latter. But here we have something different, something… smaller. And our spy photographers tell us it’s paving the way for a new entry-level sedan for the American luxury marque.

Tipped to carry the CT3 or CT4 badge, this sedan is expected to slot in (size-wise) below the ATS and effectively take its place as Cadillac’s smallest model.

That would put it up against the likes of the new Mercedes A-Class and Audi A3 sedans at the lowest point on the luxury-sedan totem pole. Like those models, it’s expected to offer all-wheel drive – but unlike them, it’d come in rear-drive guise as standard, ostensibly giving it a bit of an advantage over the competition in terms of driving dynamics. It’d also likely offer a range of engines, chief among them a turbo four, potentially with both six-speed manual and eight-speed automatic transmission options.

The sedan could also yield coupe and/or convertible variants to take on the BMW 2 Series and help Cadillac mount a concerted assault on the lower end of the luxury marketplace together with the new XT4 crossover.

Though the details still remain tightly under wraps, the prototype appears almost entirely devoid of heavy body cladding. That not only gives us a fairly clear look at its overall shape, but tells us that the sedan could already be fairly close to completion. So don’t be too surprised to see it unveiled before the end of this year.

Photos by S. Baldauf/SB-Medien