It only takes a few moments after settling in behind the wheel of the new Cadillac ATS to fully understand—and agree with—the decision to name this compact luxury vehicle the 2013 North American Car of the Year.

The best-looking car to come out of Cadillac in years, arguably tied with the third-gen CTS unveiled in January, the ATS is the perfect combination of understated luxury and youthful sportiness that is decidedly aimed at an untapped younger Caddy generation.

We got to test out the newest engine option in the family: a turbocharged 2.0-liter four-cylinder that produces around 270 horses of power and 260 pound-feet of torque. This falls roughly in the middle of the standard entry-level 2.5-liter V4 with 202 horsepower and Cadillac’s award-winning 3.6-liter V6 that throws out around 320 horses.

While the old notion of “bigger is better” tends to apply itself to engine sizes, we were impressed with the ability of the 2.0-liter Turbo to really hold its own, propelling the 3,400-pound vehicle up to cruising speed with limited difficulty. The fact that this power-dense engine offers a stark 136 hp/L—topping many of its European luxury competitors—doesn’t hurt, either. From this standpoint, we’d wager that the 2.0-liter, with its price point in the high 30s, could be a better bet than the V6 (about $10,000 more), especially considering the torques are virtually identical (260 to the V6’s 275) and the mileage is better overall.

Our Opulent Blue Metallic AWD ATS was mated to an automatic “Hydra-Matric” six-speed tap shift, but those looking for a little more adventure can opt for a traditional stick shift, a rarity in a luxury vehicle these days but a nice touch considering the younger, sportier demographic Cadillac is going after with the ATS.

As the smallest and nimblest vehicle in Caddy’s lineup, the ATS is extremely well positioned as an upscale vehicle for the 30-something young professional crowd but easily edges out similar-spec competition such as Audi’s A4 with its sheer sportiness, carrying over the signature Art and Science design language seen throughout the line.

Nothing against the A4; it drives reasonably well, it just isn’t as fun to take advantage of as the ATS and its superior handling, especially when it comes to its magnetic hugging around high-speed bends. When Cadillac set out to engineer this vehicle they set the bar extremely high, knowing that this field was already filled with the various BMW 3-series variants, Mercedes-Benz (and their new CLA class we checked out at the New York Auto Show) and the aforementioned Audis. If the car’s design and handling wasn’t enough, there is something about the nostalgia of the Cadillac brand that makes you want to root for them, despite criticisms of the direction the company has taken over the last decade.

The ATS definitely has the styling and capabilities to be a major player here in North America, but it will need to continue to develop the range of engine options (perhaps stealing from the new CTS) in order to win over a largely Eurocentric luxury audience. However, as far as we’re concerned, the ATS is a stable, exciting and welcome addition to the increasingly similar (read: boring) compact market, which definitely has us cheering for the ATS in the long run.

For more information, visit Cadillac.com