Two reasons why: Mercedes CLA and Audi A3.
We're in the era of the so-called affordable luxury segment, and brands like Mercedes-Benz and Audi have really capitalized on this with the CLA and A3, respectively. For Cadillac, only a few years ago it could say the ATS was its entry-level model. That simply won't work today. Cadillac President Johan de Nysschen has just confirmed that because ATS sales have been hurt by the CLA and A3, the GM luxury brand intends to build a new entry-level sedan of its own.
The ATS "is being compared to the new entrants that have come on in this exploding market segment populated by CLA and the Audi A3 sedan," de Nysschen explained at Detroit. "Suddenly, you have access to a Mercedes-Benz at $30,000, whereas the ATS is starting several thousand dollars higher." In other words, a cheaper Cadillac has now become a major priority. The ATS has a base price of about $35,000, making it $5k more than those aforementioned German rivals. What's also good to know here is that Cadillac's so far unnamed entry-level sedan will ride on the same rear-wheel-drive platform as the ATS.
The CLA comes standard with front-wheel-drive and optional all-wheel-drive. "The cost and packaging advantages of front-wheel drive are appealing. But Cadillac is the challenger brand," de Nysschen continued. "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." We whole heartedly approve of his logic.