Woodcliff Lake, N.J. — I’m no expert on marketing, but it would seem to me that people stop buying luxury cars in a recession. Why? Because they can’t afford 'em, and would rather pay for health care and stock up on Hamburger Helper. The double whammy hurting car sales is scarce credit and high unemployment. But I’m behind the times. I was one of the bright students at BMW University in New Jersey yesterday, and sat in a classroom listening to consultant Madelyn Hochstein of DYG talk about why the luxury premium market is going to heat up.

This was BMW University, so we also spent time behind the wheel of Ultimate Driving Machines, like this new 550i GT (There was a Rolls-Royce Silver Ghost, too, but I only got to sit in that one):

DYG "is distinguished by its expertise in the analysis and interpretation of social/cultural trends and human motivation,” the website says. And Hochstein didn’t disappoint in that regard: She said that people have stopped worshipping at the Church of Greenspan, that they are feeling embarrassed about having too much stuff (cue the George Carlin routine), that they’re developing pride in being able to handle the economy’s curve balls and are facing reality.

Hochstein also said that 43 percent of the $100,000 to $150,000 earners in her company’s polling strongly agree with the statement, “If I lost my job, it would be hard for me to get another one as good as the one I have now.” Humility, a sense of shared pain, sacrificing for the children and getting by with “gritty optimism” are in the air. Being a “hard worker” is a status symbol now. An amazing 96 percent of Americans with incomes over $150k say they’re hard workers.

And yet these same people, according to Hochstein, will buy BMWs. Of course, the company is unlikely to hire consultants who will tell it the segment is totally tanking. The BMW switches from an indulgence to a hard-earned reward. It’s part of “the richer life,” as opposed to a life of riches.

Today’s luxury car buyer is a “conscientious consumer,” and the number who say they’ve actively shopped for social, political or environmental reasons has jumped (in the biggest 2009 tracking leap) from 41 percent to 51 percent. Good news if you’re selling nontoxic oven cleaners, but BMWs?

Ah, I was getting to that. Americans still love high technology, and the 21 percent who think it causes more problems than it solved is down from 27 percent last year. Seventy two percent of the highest income group is “excited” about new tech. They’ll want cars that offer cool designs, state-of-the-art engineering, sustainability features and — get this — ethical company behavior. You wouldn’t buy a car from Bernie Madoff, would you?

This is what they call “dog whistle taste.” You can’t even hear the subtle signals that are telling you to buy the car. “Net net,” says DYG, “Despite challenges inherent in the economy, [there is] an excellent match-up between consumer values and the premium segment.”

The company faces challenges jump-starting this buying class. BMW’s October sales were down 19.1 percent compared to the same month in 2008, and year-to-date sales were down 23.7 percent. Interestingly, BMW’s diesel sales (the 335d and X5 models) were stagnant, so the company offered a $4,500 Cash for Clunkers-type “eco-credit” and now has the cars sold out until the end of the year. As German engineers never tire of telling you, fuel-efficient diesels (especially running on low-sulfur clean diesel) are the answer to our environmental woes. Americans prefer hybrids, so maybe promotions like this can start to change the perception of diesels here.

The real message to automakers is to fine-tune their advertising. Get the Mad Men churning out copy that makes the car look high-tech, a smart choice that is also environmentally friendly and embodying integrity. Piece of cake. 

MNN homepage photo: BMW

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