This Wall Street Journal story is a fascinating look at the changing market for cars. The existing media story line is that people are choosing between buying gas and buying groceries now that gas has topped $3.50 per gallon. I don’t doubt it’s true for some. But it’s definitely not true for others — even those who are selling off their SUVs and trucks and buying smaller, 4-cylinder cars. A new buying behavior has emerged and it’s helping expand the market for “high end small cars” that feature luxury options along with a small engine. This illustrates that for some people, higher gas prices are simply something they don’t want to pay, not something they can’t afford to pay. From the WSJ story:

Hugo Chao sold his 2005 Mercedes this year to a friend and bought a higher-end Ford Focus equipped with the Sync audio technology, power seats, and power windows. Sync, a technology Ford co-designed with Microsoft Corp., allows a driver to answer phone calls or change radio stations without letting go of the steering wheel.

“I really wanted a car that has the features and is nice to drive,” said Mr. Chao, 46 years old. “The Mercedes was more like a toy, and this is something I can drive every day.”

Samuel De La Garza, Ford’s marketing director for the Focus, said the auto maker expected 20% of Ford Focus sales in 2008 to be the high-end models that retail for almost $17,000. They are now 30%.

Later this year, Ford plans to expand its presence in the high-end small-car segment by offering a deluxe, SEL package. It will feature exterior chrome, leather seats that are heated, Sync technology, 16-inch wheels and ambient interior lighting. The price is $17,750. Items the auto maker is considering are outside-temperature and compass displays.