The front-wheel drive BLS is the first Cadillac to be built in Europe. It is made alongside the family brand Saab 9-5 and 9-3 in Sweden. A new small Cadillac would compete against models such as the Audi A3, the BMW One Series and the Mercedes Benz AClass.

The hint has come from Bob Lutz, GM's head of product development, when he disclosed that GM is considering the move down-market for its flagship brand so that it could take advantage of the growing popularity of the premium segment at entry level.

He said that the BMW One Series had been well received and this showed what could be done when car companies got things right.

"We are investigating the possibility of a new four-cylinder model. Nothing is signed off yet but we are working on it, " he said.

He has refused to comment further only to say that it would not be a transverse engine and that it would be rear-wheel-drive.

Rear-wheel-drive provided the best possibility for agility, he said.

There is now speculation that without an existing rear-wheel-drive platform, GM may borrow ideas from European subsidiaries or take the long route and develop a new platform.