Luxury drivers scale back

DETROIT -- Wealthier shoppers trickled back into showrooms for the holidays after staying away much of the year. But they have not been the saviors the auto industry needed. Many pinched pennies, sort of, by choosing smaller BMW and Mercedes models, or by buying top-of-the-line cars from cheaper brands.

This year, almost 14 percent of luxury buyers replaced old vehicles with brands other than traditional high-end names such as Audi, BMW, Cadillac, Infiniti, Jaguar, Lexus, Lincoln, Mercedes and Porsche. That's up from just 4 percent in 2006 and a reminder that these buyers still don't feel as wealthy as they once did. Home values are still down and portfolios shrunken, despite the stock market's gains this year.

Two beneficiaries of the shift are Buick and Hyundai, brands offering luxury models that are much cheaper than BMWs and Audis.

Buick for years was known for cushy, boring sedans normally found outside grandma's house. The average Buick buyer is still about 70 years old, and the brand is desperately trying to attract younger drivers and reverse a sales slide, says Aaron Bragman, an auto industry analyst with Global Insight in Troy, Mich.

This may be its opportunity.

After years of ho-hum styling, boring interiors and soft suspensions that made driving a chore, Buick's new LaCrosse luxury sedan is far sportier than its predecessor. It has crisper handling and sleeker styling designed to appeal to people in their 40s and 50s. At $27,000, the LaCrosse costs $5,000 to $20,000 less than its European and Japanese luxury competitors but also includes on-board hard drives and other electronic gizmos for younger drivers.

That's important because luxury shoppers are picky, even when they economize. They may be willing to give up a prestigious name or a bigger car, but they still want cutting-edge styling along with reliability and safety. The car must have excellent fit-and-finish inside and out and features such as heated leather seats and navigation systems.

"They may very well be downsizing in terms of the package. They're not downsizing in terms of the features," says Art Spinella, president of CNW Marketing Research in Oregon.

Another winner is Hyundai's Genesis, which has received stellar reviews for its luxury but can cost $15,000 to $25,000 less than higher-end cars.

Even with a small resurgence for the holidays, luxury car sales are down 27 percent so far this year. But November sales fell just 8 percent, and dealers are reporting increased traffic this month, especially those selling smaller vehicles.

The number of luxury buyers replacing their cars with smaller vehicles has tripled to 16.7 percent in the past three years, according to CNW. Many analysts predict the downsizing will continue as people try to keep costs down in an uncertain economy.

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