Down Under GM operation Holden is creating a new luxury brand to keep its customers from defecting to the likes of BMW, Audi and Mercedes-Benz, the website drive.com.au reported.

The website said Holden is planning a new luxury model to fit between the top Commodore Calais and the larger luxury Statesman and Caprice derivatives.

Drive.com.au said that Holden considered importing Cadillacs to Australia to fill the niche but market research showed that the famous American brand was not widely known Down Under while those who had heard of it did not hold it in the same esteem as European brands.

Drive.com.au said that the research also showed that buyers wanted a car with more prestige than the top Commodore that wasn’t as large as the Statesman/Caprice, which are built on a longer wheelbase.

The new car would be based on the existing Commodore sedan body shape and share major panels and components, the website added.

The "Holden Lexus" as one insider described it to drive.com.au, is intended to boost sales and maintain market share and should be on sale by early 2004.

Holden MD Peter Hanenberger would not comment on the new car to drive.com.au but said he expected to increase the company's range of variants.

“It seems more probable that smaller, more flexible plants making a constantly changing range of products will be a more sustainable formula,” he told drive.com. “In doing so we will carve out a sustainable place for ourselves in General Motors' global business strategy.”

According to drive.com.au, Hanenberger sees Holden becoming GM's global centre of expertise for rear-drive cars and the recent announcement that Monaro coupes would be sold in the US with Pontiac GTO badging is the first example of this strategy.