2007 Cadillac Escalade

New-Generation Escalation

A big bet for GM ? and one that might concern investors ? which is too bad because it's a sweet ride.

General Motors needs a hit with its overhauled Cadillac Escalade. But will the strategy of building large, luxury sport utility vehicles, which worked in the past for the General, work again?

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The 2007 Escalade, which will go on sale in the first quarter of next year, is the flagship of a new family of full-size General Motors SUVs. Although GM would not confirm, the company is believed to be investing as much as $1 billion to develop new full-size trucks and SUVs. Because Cadillac is GM's most prestigious brand, and the Escalade is one of its most profitable vehicles, pressure on the new model is strong.

Investors should be nervous. Such a big bet on big trucks and SUVs could not have come at a worse time: Fuel prices are soaring, and SUV sales are falling off the table. Talk that GM might go bankrupt is increasing, as are public statements by Chairman G. Richard Wagoner, Jr., who seems recently — and perhaps a bit reluctantly — to have decided he needs to reassure stockholders amid the doomsday prophecies.

At a recent New York media introduction for the new Escalade, Cadillac General Manager Jim Taylor was asked what he has been talking about with Wagoner lately.

"He's not much in a talking mood these days," said Taylor. "That's one set of shoes I wouldn't want right now. He's got a lot of weight on his shoulders."

Taylor knows the new Escalade is a crucial vehicle for both GM and Cadillac.

"The 2007 Escalade represents the next phase of Cadillac's product renaissance — a renaissance that was launched by the previous-generation Escalade," he said in a recent statement. "The '07 model raises the bar with exceptional exterior style, interior refinement, increased performance and enhanced ride and handling smoothness."

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The Escalade, which attracts the youngest customers of any Cadillac, will appear first as an SUV. Its cousins — the longer Escalade ESV SUV and the Escalade EXT pickup — will appear later in 2006.

The new Escalade employs design tricks that make it look a bit more compact than its predecessor. The sheet metal is new, the windshield angle is faster and layers of chrome accents adorn the exterior. The wheels, which Escalade buyers love to customize, have become bigger, with standard 18-inchers complementing optional chrome 22-inchers. Overall, the Escalade has a wider track and lower stance, making it look a bit more athletic.

But Cadillac says the interior is where the Escalade has seen its biggest revisions. Although Cadillac's publicized turnaround in recent years has revolved around edgy exterior designs, the brand is now turning its focus to building interiors that can compete in luxury and sophistication with those from BMW and DaimlerChrysler's Mercedes-Benz subsidiary.

The new Escalade interior includes instrument gauges with white needles and blue-light inlays with continuously lit, white-LED backlighting. The car features a new, power-operated fold-and-tumble second-row seat that eases access to the third row.

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An eight-inch, touch-screen navigation system complements a DVD system with an eight-inch, flip-down screen. The Escalade features a Bose 5.1 digital surround sound system integrated into a new family of radios that play DVD audio, DVD video, CDs, MP3s and XM Satellite Radio.

Inside and out, the new Escalade is handsome and will no doubt remain one of Detroit's most iconic vehicles. But will remaining an icon translate into paying back part of a huge investment? SUV sales are working against the new Escalade, but this esteemed vehicle is sure not to be a flop.

Forbes Fact

The new Escalade will use a 6.2-liter V-8 engine with 403 horsepower.