We learned last week that Cadillac cancelled plans to build the V12 XLS flagship sedan due to the current economic conditions and the high gas-prices. It will instead focus on a replacement for the STS and DTS. According to Automotive News, Cadillac will also introduce a small sedan with a 4-cylinder engine in the U.S. by late 2010.

The 2011 model will be built on a rear-wheel-drive architecture and executives are also considering offering a V6 option. There is debate amongst executives is whether U.S. customers will be satisfied with only a 4-cylinder option, even if it gets turbochargers.

“There is a big debate as to whether it is four only. I think that is a bridge too far,” Cadillac’s General Manager Jim Taylor said at a recent GM press event.

Taylor said the un-named car will fit below the CTS in Cadillac’s lineup. GM currently sells the small BLS sedan and wagon in Europe. Executives are still debating whether to badge the small sedan ‘BLS’ in the U.S.

Source: Automotive News (Subscription Required)