When they were first introduced, the only hybrid cars on the market were Toyotas and Hondas -- small, practical cars that were admittedly a little funny-looking. These vehicles were much more about economy than style. Luxury automakers were slow to jump on the hybrid bandwagon, as their target customers have not generally been too concerned with the cost of fuel.

Times have changed, though, and rising fuel costs are affecting even the wealthiest sectors of the population. Environmental concerns are growing, too, and hybrid cars are in very high demand. In June 2009, Mercedes will begin selling its first hybrid -- a large car that balances fuel economy with sexiness.

At 30 miles per gallon, the new model will approximately double the mileage of the non-hybrid luxury S-class sedan, but it's still no 60mpg Prius. Mercedes execs argue that this large car is more practical for their customers, with plenty of space to pack for vacations. There's no official price tag just yet, but Mercedes Marketing Director Klaus Maier estimates a premium of less than €10,000, or $14,000. That would put the total price in the neighborhood of $100,000 - $160,000, depending on options.

It's been widely reported that new car sales are in the toilet, but the carnage isn't limited to economy-priced vehicles. According to Autodata, Mercedes-Benz sales fell 3.7% compared with March last year, BMW and Lexus fared worse, dropping 8.7% and 13.6% respectively. Luxury vehicle sales are off about 13% year to date.

The USA Today speculates that "Purveyors of the finer things in life are finding their well-heeled customers are caught in the same economic riptide tugging at the less well-off."

But I would suggest that there's something else at work here. Easy credit and a consumer culture focused on conspicuous consumption meant that a lot of people were buying luxury goods who had no business doing so. There's really no way to tell whether someone is rich anymore, short of looking at their tax returns and bank balances. Anyone could buy a Lexus, provided he could make the monthly payments which were artificially low because the Federal Reserve was taking an ax to interest rates -- at the expense of retirees living on fixed incomes.

Now the posers are being flushed out of the luxury goods market as the credit markets tighten. As Warren Buffett has said, when the tide goes out, you get to see who's swimming naked. And there were a lot of people driving BMWs in their birthday suits.