If someone in the competition makes a better car than the 3 series and prices it competitively, it might take a while but sales will start shifting.

Cadillac will sell a diesel version of its new CTS sedan in Europe.

"We expect at least 50 percent of CTS sales to be diesels," said Dick Braakhekke, a Cadillac Europe spokesman.

Without being more specific, he said the diesel would come during the early part of the model's life cycle.

The second-generation CTS debuted this month at the Detroit auto show. European sales of the gasoline-powered CTS start in October.

Company sources say Italian engine manufacturer VM Motori will supply the CTS a 3.0-liter V6 diesel with about 245 hp.

The General Motors luxury brand says it sold 464 CTS sedans in Europe last year.

Cadillac's only current model that offers a diesel is the BLS lower-premium sedan, sold only in Europe. GM Powertrain makes the BLS' 1.9-liter diesel.

Cadillac needs to offer diesels to compete with German premium brands. About 70 percent of Audi's unit sales in Europe are diesels. For BMW the figure is 67 percent and for Mercedes-Benz 58 percent.

BM Motori supplies four-clyinder, 1.5- and 2.0-liter diesel engines for Chevrolet Euorpe, GM's entry brand. The engines are built by a VM Motori - GM Daewoo joint venture in Korea.

The General Motors luxury brand says it sold 464 CTS sedans in Europe last year.

GENEVA -- Over the next three months or so, General Motors executives will decide whether to produce a new Cadillac CTS wagon and coupe, the next step in Cadillac's rebirth as a global brand.

Hoping to build on the successful debut of the CTS in the United States, General Motors could create a CTS family of models reminiscent of the BMW 3 series. If Cadillac expands its presence in Europe, it could afford to build niche vehicles like a wagon that otherwise would face a marginal future as U.S.-only cars.

GM already has produced clay models of these new Cadillacs. In the near future, it will decide whether to OK development, say GM Vice Chairman Bob Lutz and Cadillac General Manager Jim Taylor.

Starting in the late 1990s, GM jump-started Cadillac's fortunes with sharp-edged design, luxury SUVs and rear-wheel-drive cars. Now Taylor and Lutz want to build more momentum.

During interviews at the Geneva auto show, both executives explained their plans to make Cadillac competitive with Lexus, BMW and Mercedes-Benz. They also voiced varying opinions about some Cadillac issues, offering a revealing glimpse of GM's internal give-and-take.

As Cadillac enters the second phase of its revival, they must decide:

Whether to approve a long-delayed ultra-luxury car costing more than $150,000.

Whether Cadillac needs an entry-level model priced under $30,000. Taylor is reluctant; he prefers to keep the CTS as Cadillac's lowest-priced car. Lutz says he is open to an entry-level Cadillac, but it won't be the European BLS sedan.

Whether to keep or discontinue the front-wheel-drive DTS sedan, Cadillac's top-selling nameplate. Taylor says he's undecided; Lutz prefers to phase it out and keep the rwd STS.

Front-wheel drive does not match the brand image of global luxury Cadillac is seeking. But the DTS was Cadillac's top seller last year, with U.S. sales of 58,224. The DTS accounted for 25.6 percent - about one-quarter of the brand's U.S. volume.

Taylor said GM could put the DTS on the Zeta rwd platform, which will be used for the coming Pontiac G8; merge it with the STS line; or keep it in its current form.

But in a separate interview, Lutz flatly stated that the DTS replacement should be rwd.

Selling more vehicles outside Cadillac's traditional U.S. stronghold would make it easier to build a business case for niche vehicles, Taylor said. Higher sales volumes would allow GM to achieve economies of scale currently enjoyed by key competitors BMW and Mercedes.

"If all you have is your U.S. volume, it's pretty hard to put together a capital case," Taylor said.

The CTS wagon in particular would be stronger in Europe than the United States, and would aid GM's struggle to build the brand there, he said. To be successful, it must achieve annual global sales of 20,000 units, Taylor said. For comparison, GM sold 54,846 CTS units in the United States last year.

Small Caddy?

Lutz said GM will not bring the European BLS, a front-drive car that shares parts with the Saab 9-3, to the United States. As for a small rwd vehicle, "there's certainly an opening, whether we choose to fill it or not," Lutz said.

Taylor takes the opposite view. He says GM doesn't need a smaller car slotted below the CTS. The smaller car would compete with cars such as the Audi A3 and the coming BMW 1 series and would sell in the upper $20,000s.

Says Taylor: "We're not going there. We're a $30,000-to-$40,000 player, not a $20,000-to-$30,000 player."

At the upper end of the lineup, the two executives say they are considering an ultra-luxury car to enhance Cadillac's brand prestige. Both mentioned the Sixteen and Cien concepts as possible models. The Sixteen is a large sedan with a V-16 engine and the Cien a futuristic V-12 sports car.

But Lutz and Taylor say the ultra-luxury program keeps getting delayed. Said Lutz: "We always wind up pushing it out one more year because we have other, more pressing priorities."

The next-generation Cadillac CTS-V will have "a power level only described as unexpectedly high,” GM vice chairman Bob Lutz told Car and Driver. He described the vehicle as "flat-out incredible. I’ve never driven anything like that."

Based on the 2008 Cadillac CTS sedan, the new CTS-V os expected to arrive later this year as a 2009 model.

Specific details of the CTS-V's engine remain a mystery. Some sources say power will come from a 4.6-liter naturally aspirated V8, while others insist a supercharged V8 is in store for the hot CTS. Some sources even claim this car will share the "Blue Devil" Corvette's supercharged V8.

C&D says the 505 hp, 7.0-liter LS7 V8 that currently powers the Corvette is a distinct possibility, considering the previous-generation CTS-V is powered by the 400 hp 6.0-liter Corvette LS2 powerplant.

Recent spy photos have shown the 2009 CTS-V undergoing extensive testing at the Nürburgring track in Germany and elsewhere. Prototypes feature a new grille design and a massive lower air-intake — both sporting a sporty mesh finish in the familiar V-spec tradition.