Cadillac's Sporty STS

The new STS is more than just an alternative to BMW or Lexus. It's a great car in its own rightwith a purely American attitude

Editor's Rating:

The Good: Sweet looks, available all-wheel drive, new V-6 engine

The Bad: Cramped rear seats, less-crisp handling than BMW and Lexus

The Bottom Line: Cadillac's sporty STS just got bolder and better

Up Front

One of the pivotal moments in the recent history of General Motors (GM) was the day back in 2001 when Chief Executive G. Richard Wagoner Jr. started looking around for the auto industry's next Robert Lutz to help infuse his company's products with more pizzazz. Wagoner famously decided that product czar Lutz, then in his late 60s, was himself the next Bob Lutz, and he hired the legendary former Chrysler executive as GM's vice-chairman. The Swiss-born Lutz, now 75, immediately started pushing GM to make more cars in the "I've gotta have it" mold.

Lutz's record at GM has been mixed. Some models he championed, such as the revived Pontiac GTO, have flopped. But when it comes to Cadillac, he has worked wonders. You can see his love of European workmanship, bold design touches, and sumptuous interiors all over the new Cadillac STS, which got a significant freshening up for the '08 model year. Quality also has dramatically improved: Cadillac ranked third in the latest J.D. Power & Associates Vehicle Dependability Study, announced Aug. 9, behind Lexus (TM) and Buick.

I was a fan of the previous STS, in which Lutz also had a big hand, but the '08 is significantly better.

For starters, the '08 STS is the first GM model offered with the company's efficient new 3.6-liter, V-6, direct-injection engine. The new engine, which is coupled with a six-speed automatic transmission, generates 302 horsepower—47 more hp than the V-6 in the previous STS and only 18 horses less than the optional 4.6-liter Northstar V-8, the only other engine choice in the STS.

The new V-6 is a marvelous engine. It uses regular gasoline, for instance, while GM's V-8 and most of the engines in competing models require expensive premium. That's about a 10%-per-gallon savings. The V-6-powered STS also gets decent gas mileage for a big luxury car. It's rated at 17 miles per gallon in the city and 26 mpg on the highway. In a stretch of 574 miles of mainly highway driving, I got 21.4 mpg.

An added benefit: The company says that direct injection—in which gasoline is pumped directly into the cylinders, rather than higher up near the valves—will reduce hydrocarbon emissions by 25%.

Yet the V-6-powered version of the 2008 STS starts at just $43,135, vs. $52,555 for the V-8 version. That's a savings of more than nine grand for giving up 18 horsepower! Gee, that's a tough decision.

Like its European and Japanese rivals, the STS comes with tons of standard equipment at those prices. For instance, standard safety gear includes stability and traction control; front, side, and side-curtain airbags; rear parking assist; antilock brakes with braking assist; and OnStar telematics.

GM also has done a number of things to make the V-6-powered version of the STS more appealing. For instance, it's now available with optional all-wheel drive ($1,900), and with a cool heads-up display that projects instrument and navigation system readings onto the windscreen so they seem to hover out over the hood in front of the driver. The luxury packages available on the V-6 STS include the new $6,500 Platinum Edition package with Tuscany leather seats, olive and ash burl-wood trim, and extra saddle leather on the doors, dash, and center console.

New optional performance packages are also available on both the V-6- and V-8-powered models. The $5,845 package in the V-6 STS includes comfort features such as an upgraded sound system and eight-way power seats, as well as performance add-ons including 18-inch polished chrome wheels, bigger rear brakes, a limited slip differential, an automatic self-leveling system to keep the car steady during hard driving, and an upgraded cooling system. The similar $8,190 package in the V-8 model also includes an advanced magnetic ride control that smoothes out the car's ride even more during hard driving and on bumpy roads.

The performance packages help fill in the gap between the standard STS and the superfast STS-V, which is powered by a 4.4-liter, supercharged V-8 and has a much higher base price of $77,855. The STS-V is being redesigned for the '09 model year, so if you want the ultimate performance STS, it may pay to wait.

The changes in the STS's exterior styling for '08 are relatively superficial—but to my eye they significantly improve the car's look. As with the totally redesigned '08 Cadillac CTS (more on that in a future review), the STS has a new grille that is both bigger and bolder. There's also a new, low-to-the-ground front fascia under the grille. Two new decorative air vents on the front fenders add a touch of flair to the STS's flanks. And big, ugly-looking (in a good way) chrome tips on the exhaust pipes and an understated little spoiler on the rear deck give the car's hind end a more macho look.

With new versions of the CTS and STS coming out, this is a transition year for Cadillac, so sales haven't been strong. U.S. sales of the STS were off by one-quarter to 11,120 through July, while CTS sales dropped 20% to 27,777.

Cadillac's competitors are doing a little better, but not much. Through the end of July, U.S. sales were down 8.4% for BMW's (BMWG) 5-Series, 9.9% for the Lexus GS350, and 13.8% for Infiniti's (NSANY) M35/M45 sedans. Only the Mercedes (DAI) E-Class was up slightly (1.1%) during the period.

Behind the Wheel

The STS is often described as a competitor to the hot European and Japanese luxury performance models listed above. But I see it more as an American-style alternative. The STS now comes close to matching BMW, Mercedes, and Lexus in many respects, but its looks and handling retain a distinctively American flavor.

Certainly, the STS is speedy enough to be competitive. Even the V-6-equipped version of the car accelerates from zero to 60 mph in around 7.6 seconds—the same as the '08 BMW 528xi, and only half a second slower than the '08 528i. When you punch the gas pedal, the new V-6 in the STS feels like it has the power of a V-8, both from a standing stop and at highway speed. (The STS-V will jump from zero to 60 in under five seconds if sheer speed is a priority.

The STS also provides a surprising amount of road feel. In fact, I drove the STS during the same week that I test-drove a 2008 S-Type Jaguar, and much preferred the ride and handling of the Cadillac. Rear-wheel drive is standard in the STS, and there's no hint of the overly cushy ride that in Cadillacs of yore made the driver feel isolated from the road. You feel the nuances of the road in this car without ever being jostled by bumps and potholes.

However, the STS—at least the V-6 version of the car I drove without magnetic ride control—is still more oriented toward a comfortable ride than a BMW, Lexus, or Infiniti. The handling isn't as crisp and the suspension isn't quite as taut. And the manual shifting function on the automatic transmission isn't even remotely as much fun to use. It's slower than the lightning-quick shifter in a BMW, and—surprisingly—the STS isn't available with steering-wheel-mounted paddle shifters, a feature that's now showing up even on economy cars such as the Honda Fit.

To my eye, at least, the STS's interior remains gorgeous. The aluminum and Sapele Pomelle wood trim on the doors and dash of my test car was genuinely beautiful. The center console, with its tall, elegant air ducts, is one of the most attractive around, and there's good-looking stitched leather trim on the dash and around the console. The steering wheel is smaller and sportier than before, and is now available with heating and additional wood trim.

The leather-upholstered seats have a sporty, supportive European feel to them. The front seatbacks fold down almost flat if you find yourself in need of a nap during long drives. The rear seatbacks won't fold down, but there's a pass-through between the trunk and rear passenger compartment to accommodate skis and other long objects (I hauled four eight-foot sections of deck railing home from my local Lowe's with no problem). The biggest downside of the STS's interior is that legroom in the rear seats remains relatively cramped.

The STS is also available with adaptive cruise control and most of the other optional high-tech gear you can get on competing Japanese and German models. A lot of this stuff is far more useful than you'd think. For instance, the remote starting function allows you to start up the STS from inside a restaurant so the car's cabin is cooled off on hot summer days and warmed up in winter before you get in. Having the navigation system's driving instructions projected out in front of your eyes via the heads-up display is also convenient. You don't have to constantly glance over at the display on the center console, or have your music interrupted by voice directions.

However, I found some of the newly available accessories on the '08 STS less than useful. For instance, you can now get the car with an optional, Japanese-style lane departure warning system that beeps and flashes a light on the instrument panel when you cross the lane markers in the middle and on the sides of the road without putting on the turn signal. If, like me, you have a tendency to hug the center of the road when there's no oncoming traffic, the constant beeping and flashing is very annoying.

Ditto for the STS's new Volvo-style blind-spot warning system. It's supposed to cause little warning lights to flash on the outside mirrors when the car is being overtaken by traffic you might not immediately be aware of. In my test car, the warning lights mainly flashed in parking lots and on narrow country roads lined with lots of trees and bushes.

Buy It Or Bag It?

If you're interested in an STS, it's a good time to buy. GM is already discounting the '08 by giving dealers $1,500 of "marketing support" that they can pass on to buyers. So far, the average buyer of the '08 STS has gotten a discount of $1,411, according to the Power Information Network, which has reduced the model's average selling price to $50,391.

In the previous STS, I recommended going with the big V-8 engine because the V-6 was too pokey. As of '08, however, the V-6 is the clear engine of choice. It's far cheaper and offers almost as much power as the V-8. If you go with the V-6, you can easily buy a well-equipped '08 STS for under $50,000.

That makes the Cadillac competitive with its main rivals. By comparison, the 2008 BMW 528i has been selling for an average of $47,874 and the '08 BMW 535i for $56,000, according to PIN. The '08 Mercedes-Benz E350 is going for an average of $53,698.

There are no comparable numbers yet on the '08 Japanese models. But the 2007 Infiniti M45 has been selling for an average of $51,878 and the M35 for $45,168. The 2007 Lexus GS350 has been selling for an average of $46,275. (PIN and J.D. Power & Associates, like BusinessWeek, are units of The McGraw-Hill Companies (MHP).)

Given that the price is roughly equal, most shoppers would go with a German or Japanese model. But I'd recommend test-driving a Cadillac first. Americans have a tendency to underestimate the quality of domestically made products, and Cadillacs are much better than most people think. As of '08, that's especially true of the STS.

For more on the 2008 Cadillac STS, see BusinessWeek's slide show.

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