NEW YORK (CNN/Money) - Can second place count as a major win? It works for NASCAR, or the Olympics.

Now add Cadillac. The GM division sleepwalked for decades while European and Japanese luxury brands stole their customers, prestige and pride. Once the zenith of luxury, the Cadillac name tumbled earthward, becoming a symbol of infirm, behind-the-times cars.

Cadillac XLR

Now Cadillac is mounting a comeback. Sure, we've heard that one before.

But this time it's real. In quick succession, we're seeing a trio of hard-charging, eye-catching Cadillacs: The XLR luxury roadster, SRX crossover SUV, and the 400-horsepower CTS-V sports sedan.

It's like an automotive "Queer Eye for the Straight Guy," with the black-clad hipsters of BMW and Mercedes making over the Detroit dork in Sans-a-belt slacks.

Mercedes-Benz SL500

Stylistically, the 2004 XLR is the best of the Cadillac bunch. Based on the upcoming sixth-generation Corvette, this expensive, hyper-masculine convertible is guaranteed to put you up front in the valet line. Tested against its rivals, the two-seat Cadillac makes a convincing case for second place in its segment. It easily outperforms the Jaguar XK and Lexus SC 430.

The XLR meets its match only in the more-expensive and sophisticated Mercedes-Benz SL500. And in performance, it's virtually a wash. Call it a moral victory for up-and-coming Cadillac.

Mercedes has the advantage of history. The SL has enjoyed nearly a half-century of evolution, beginning with the storied gullwing SL of the '50s. The latest incarnation is an instant classic, among the new century's most successful designs.

The plastic-bodied XLR is all-new and brazenly modern. It's a flashy eyeful, a Dolce & Gabbana suit next to the Benz' navy single-breasted. I'll admit having been cool toward Cadillac's razor-edged styling theme. But the XLR shows this new look maturing into something less harsh, yet still intriguing and unique -- just what Cadillac needs to regain its identity. Judging from the euphoric reactions of many onlookers, the XLR is already a smash.

Cadillac massaged its 4.6-liter, Northstar V-8 so it produces 320 horsepower; the Benz gets 302 horsepower from its 5.0-liter V-8. With the Cadillac easily the lightest car in its segment (400 fewer pounds than the Benz, 900 fewer than the Lexus), it's also the quickest, running from 0-60 mph in about 5.8 seconds, compared to 6.1 seconds for the Mercedes. This Caddy really flies, and its racy-yet-refined exhaust note is terrific.

Caddy vs. Benz   Cadillac XLR  Mercedes-Benz SL500  Base price  $76,200   $88,010   Engine  320 hp, 4.6-liter V-8  302 hp, 5.0-liter V-8  Zero-to-60  5.8 seconds   6.1 seconds   Mileage  17 mpg city/24 hwy.   15 mpg city/22 hwy   Weight  3,607 lbs   4,045 lbs

But the Mercedes' larger engine, deeper well of torque (339 lb. ft. versus 310 lb. ft.) and superior throttle response still gives it a slight edge in the cut-and-thrust of everyday driving. The Cadillac's five-speed automatic, with manumatic function, is only average for this class. The shifter feels a bit wobbly in its gate. The SL's five-speed is among the world's most fun-to-drive manumatics, quicker and slicker than the XLR's.

This is the clearest win for the Mercedes. The Benz' interior is as gorgeous as its exterior, with a richness of design, materials and craftsmanship the XLR can't match. It's roomier inside as well, with more storage and stretch-out space for taller drivers. And the Benz' cosseting seats top the chairs in the XLR.

Despite what you may have heard -- amazing how so many car critics are bowled over by a few strips of wood and leather -- the Cadillac's interior shows that GM still has work to do to match the luxury leaders. It's clean and modern, a good start, and the eucalyptus wood is a nice touch.

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But that's offset by flaws like so-so switches, middling fit-and-finish and a clunky steering column adjuster. The drivers' instruments, designed by jeweler Bulgari, look more like a Korean streetcorner knock-off. Despite its five-inch-longer wheelbase, the XLR offers no storage behind the seats, limited seat travel and a tiny glove box that barely swallowed a small CD case.

The Mercedes also holds nearly twice as much luggage when its hardtop is automatically retracted into the trunk, an entertaining process that takes about 17 seconds for the Benz versus 27 for the XLR. The Cadillac's paltry 4.4 cubic feet of top-down space (about half that of a Mazda Miata) is poorly suited for even a weekend trip, especially for well-heeled buyers who would expect to bring more than a gym bag. I couldn't fit even a single wheeled carry-on in the sliver of space left when the top is folded. This is the XLR's biggest downside.

Fortunately, the XLR's saintly performance washes away most sins. As you'd expect from a Corvette-based model, the XLR carves turns like an Olympic downhiller, yet the Caddy also delivers a sleigh-smooth ride. Credit special tuning of the excellent Magnetic Ride Control system first used on the 50th Anniversary Corvette.

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The unique system analyzes wheel movements and adapts to road conditions with microchip speed, able to adjust shocks from soft to hard in the time it takes the XLR to cover one inch of roadway at 60 m.p.h. That keeps the body flatter over bumps and curves, and the tires locked onto the road. It works great, though the nastiest pavement still produced a few more shudders and unwanted body motions than in the Benz.

And unlike the Corvette or Mercedes, the XLR's system doesn't let the driver select settings for a plusher ride or firmer handling. (To be fair, the Mercedes' adaptive suspension settings mostly stiffen the ride without doing much to improve handling).

By any standards of luxury performance, both cars excel, effortlessly managing speeds that would be considered reckless in many cars. Steering is precise, brakes powerful, roadholding ferocious.

The Mercedes' one performance blemish is its high-tech electrohydraulic brakes, essentially a computer-controlled brake system. With mind-boggling 8-piston disc calipers in front, they'll actually effect shorter stops than the XLR; but they're also obnoxiously touchy at slow speeds, requiring far too much concentration to roll up smoothly to stoplights.

Bottom line? The Mercedes feels more refined and rock-solid than the XLR, but some drivers may decide it's also less fun to drive. The Benz is so composed, so unflappable that it sometimes seems to be driving itself, a thoroughbred with no need for its pesky jockey.

As you'd expect, these cars are slathered with safety and luxury features, including side air bags, stability control, optional adaptive cruise control and more. Some Cadillac goodies, such as air-conditioned seats and keyless go -- which recognizes the fob in your pocket and lets you open doors and start the engine with a pushbutton -- are optional on the SL500. The Benz counters with standard features including a safety roof bar that pops up to protect heads during a rollover, an extra air bag for the driver's knees, and its 8-piston electrohydraulic brakes.

The XLR's $76,200 base price compares to $88,010 for the SL500, the latter including a $1,300 gas-guzzler tax. Now, people who can afford either model may be the price-no-object sort, and I do believe the Mercedes can justify its steeper tag.

But Cadillac has fashioned one impressive luxury GT. A viable American alternative that will set you back $12,000 less -- more if you start checking off pricey options on the Benz.

So it's a silver medal for the XLR. Against the mighty Mercedes, no shame in that. Cue the anthem for Cadillac.

Lawrence Ulrich writes about cars for Money Magazine. You can e-mail him at autos@cnnmoney.com.