Buicks become a popular way to drive luxury cars under the radar

FORTUNE -- The rich are like the rest of us when the economy pinches: They turn from spenders into savers. And they become less prone to flamboyance.

In the world of high-end vehicles, one way to taste luxury while economizing is to purchase vehicles that deliver amenities and forego the glitz. General Motors' (GM) Buick LaCrosse and Hyundai's Genesis sedans lately have been carving a niche with customers who in more prosperous times might have been driving something from Lexus, Audi, BMW, Cadillac, or Mercedes.

By watching which used models are traded for new car purchases, automakers know when owners of luxury are trading down. Edmunds.com, the automotive website, detected this so-called "substitution effect" by measuring what vehicles were being traded for Hyundai/Kia models built in South Korea. In 2007 about 3.5 percent of those who bought new Hyundai or Kia vehicles traded in a BMW, Jaguar or other luxury car. The rate nearly doubled for the 2011 model year, Edmunds discovered.

Karl Bauer, Edmunds senior analyst, said the increase reflects not just a growing desire to save money on new-vehicle purchases, but the growing appeal of Hyundai's near-luxury Genesis sedan.

"You could argue that value for the money is the new black, people want to get a good amount of value for the money,'' Brauer said. "Buying a car to impress the neighbors isn't in any more. Fewer and fewer people can justify spending an extra $5,000 just to have that luxury badge on the hood.''

A BMW 535i sedan, loaded with options such as navigation, adaptive cruise control and night vision, costs about $60,000. The vehicle is highly rated and is powered with a 3-liter, six-cylinder engine. Buick's 2011 LaCrosse, with a 3.6-liter engine, navigation, leather and other options costs about $40,000.

U.S. sales of the LaCrosse this year have more than doubled to 56,038 through the end of November, compared with 23,237 a year earlier. Sales of BMW 5-Series sedans, by contrast, have fallen 4.7 percent to 33,746 from 35,392 during the same period.

I've driven both of these estimable sedans. Amazingly they're quite comparable in terms of comfort, performance and handling attributes, even though the BMW costs roughly 50 percent more than the Buick. But years of image-building by BMW have produced an intangible sense that one's status is elevated simply by getting behind the wheel.

General Motors has been trying for years to make Buick feel like a "premium" brand, albeit not quite at the level of Cadillac, GM's luxury brand. The LaCrosse might be the first Buick sedan to achieve that goal. But it's not the only main-brand sedan to steal customers from the luxury lines; Said Deep, a Ford spokesman, said about 25 percent of those buying the top-of-the-line, $47,500 Taurus sedan with all-wheel-drive and several luxury features, are trading in luxury cars upon delivery of their new Ford.

Hyundai takes the idea of near-luxury a step further with Genesis, a luxury sedan in every sense but image. Genesis, which was named "Car of the Year" by journalists at the 2009 North American International Auto Show, costs less than $34,000. It's powered by a 3.8-liter six-cylinder engine, loaded with amenities and frills such as power rear sunshades and rain-sensing windshield wipers.

Genesis sales are up 37 percent this year. "For people in the business like me who know Hyundai's vehicles, it's gratifying to see them doing so well,'' Brauer said.

Indeed, Hyundai is so pleased with the sales performance of Genesis and its other vehicles, the South Korean carmaker is upgrading the entire Hyundai brand image to "modern premium," consistent with its global ambitions to become the world's top seller.