Fueled by record high gas prices and a demographic shift that has baby boomer families downsizing as their children leave for college, small cars are soaring in popularity. Luckily for car buyers, automakers are devoting more attention to this segment of the car market, too.

Chevy's new HHR is a compact car intended to take on Chrysler's PT Cruiser and BMW's Mini Cooper. Click photo for larger image. Related coverage Cars of the future: Analysts expect more content for less cash

Cheap econoboxes of the past are being replaced with stylish, high performance versions -- a shift that increasingly will carry over in the price tag, analysts say. Over the course of the next five to 10 years, a good many new small cars that consumers will see will be premium models selling for $20,000 to $30,000, double the price most Americas have come to expect.

This shift represents a significant change both for the industry and the small car market, with more models taking on a European and Asian flair, where small is beautiful and expressive, personalized, strong-performing cars such as Japan's Toyota Scion and Britain's Mini Cooper are in high demand.

"I don't think this trend necessarily began across the pond in Europe, but they do have a lot of influence. Anytime I go to auto shows there, I'm blown away at the amount of content and innovation that a lot of manufacturers are putting into small cars," said Joe Dehner, director of interior/exterior design within the Chrysler unit's product design office in Auburn Hills, Mich.

"In Europe, a small car doesn't mean it's a cheap car," agreed Louis D. "Chip" Thole, a design manager for Detroit-based General Motors. "People everywhere now want a small footprint outside and a classy, big interior inside. It's not just about style, it's a kind of total design thinking that prevails."

The Frankfurt Auto Show, which opens next month, will be awash in small, distinctive small cars, most of which aren't sold in the United States. They include the Fiat Grande Punto, the Renault Clio and BMW's 1 Series models.

	Above: With a suggested price that can exceed $30,000, Audi's new A3 is at the higher end of the small-car market. Below: With its Scion, Toyota has been able to successfully tap both the youth market and older buyers. A basic model can be had for $13,000. Click photo for larger image.

The small car buyer of old who wants only cheap wheels to get from point A to B is confronting fewer options -- outside of the used-car market. Many small car buyers these days "are no different in their aspirations than buyers of luxury cars," Dehner said. "They want quality, style, premium materials and innovation just like anyone else."

The higher end of the luxury small car market includes such models as Audi's new A3, which has the same cache as its larger models and suggested price that can exceed $30,000, and the new, powerful Lexus IS250 and IS300 that will hit the market in a month or so with prices that are likely to exceed the A3's level.

More basic small cars are changing, too. For instance, the new Honda Civic set to debut this fall will shed its modest image for hot styling and peppy engines. And Dodge's 2007 Caliber, a replacement for today's inexpensive entry level Neon, has edgy sharp character lines, an aggressive front end and a profile unlike anything seen previously on that company's small cars.

The growth of consumer interest in snappy, sometimes more costly small cars has been foreshadowed for several years.

First, there was Chrysler's PT Cruiser, with its retro styling, tall profile and flexible interior. It became an overnight sensation, and fan clubs have cropped all over for a car that can start at around $13,000 but can climb to as high as $30,000, depending on options.

Then there's the upscale Mini Cooper, affiliated with BMW. It starts at $18,000 and tops out at around $30,000, has won many awards and has the highest resale value in the industry. After almost four years on the market, it still brings full sticker prices -- and sometimes long waits -- for its buyers.

Most recently, Toyota's Scion line has become something akin to a fad, one of the few brands -- along with the Mini Cooper -- that have been able to successfully tap both the youth market and older buyers. A basic model can be had for $13,000, but for a fully decked out version, buyers will have to shell out $23,000 or more.

"We now have many imaginative small cars that are not necessarily cheap," said Jack Nerad, an analyst with industry researcher Kelley Blue Book.

"Many will be like the new Audi A3, which is very nice and well equipped, but it just happens to be small. It will be interesting to see if the market reacts well to a $25,000 to $28,000 car that is small."

Also feeding the push to small cars in design studios is the "hot" factor -- with demand and prices growing for such vehicles, so is the desire to work on them. "It's a less conservative segment now than other segments of the market," Nerad said.

That's a big change from the "good old days," when working on a small car design was thought to be both difficult and unappealing. "That was because designers were working with a paradigm that basically said, 'A small car is just a downsized big car.' But that's no longer correct," Dehner said.

Designers now have learned how to work with and enjoy the unique characteristics and advantages of small cars, he said. For instance, one challenge was figure out how to make a small car's interior appear larger than it is. There are some ... things you can do to trick the eye to make it seem bigger," by using lighter colors, different materials and other elements, he said.

The emphasis on edgier, trend-setting design has resulted in such unique cars as the Scion xB, a sort of carriage-like car people seem to either love or hate. Kelley considers the design to be radical, but noted that it's playing well on show-room floors. "If you're able to catch lightning in a bottle like Scion did, you'll do really well in the future," he said.

The push to appeal to small- car buyers marks a shift for such brands as Mercedes, Audi and BMW, which for years were loathe to bring out smaller cars for fear that it would bring down the value and cachet of their larger models.

Now each of those automakers -- and several others -- have or will soon offer small models in the belief it's vital not only to gain sales but to appeal to upscale buyers.

It's expected, for example, that Cadillac may bring to the United States its luxury small sedan, the BRX, that it sells in Europe -- a shift in thinking for a brand that marked a low point with the 1981 introduction of another small model, the Cimmaron, which buyers felt was nothing more than the warmed-over bargain car, the Chevrolet Cavalier.

The Audi A3 is probably the best example of where the auto industry in general, and the small car market in particular, is headed, analysts said.

It has an interior with materials and styling that are the equals of anything else in Audi's lineup. It's wickedly fast, with a powerful 200 horsepower engine that hits 60 in seven seconds, and it corners as aggressively as any high performance sedan.

But despite what consumers might expect, it has a manual transmission that does not have a clutch pedal. You shift with your fingers using paddles behind the steering wheel.

"I think we're going to see the death of stick-shift transmissions," Nerad said. "I've driven some of the paddle shifter transmissions, like the Audi A3 and the all new Lexus IS 250 and IS350, and those things just work so well when you get in and drive."

The A3 has such flexible features as fold-down seats and a hatchback, which used to be the bane of Americans who thought it suggested a cheap, entry level car.

The flexibility issue is one of the biggest ones that designers must grapple with, they say.

"Look at just about any small car in Europe and how the seats fold, tumble, and are deployed in other ways. It's incredible," Dehner said. "The customers are thinking, 'If I have this small car, and this much interior volume, how can I best utilize that space and either get the seats out of the way, or otherwise use as much space as possible?' "

The Lexus IS cars, soon to be on sale, also bring another technology that will be seen more frequently: diesel engines. Though only the European versions of the car are now scheduled to have the aluminum 2.2 liter 177 horsepower four cylinder diesel engine, analysts think it's only a matter of time before they come here.

"That's one strong trend you can look for. Diesel is an underdog now, but it will become more prominent over time," Nerad said. "As diesel fuel changes and we get rid of sulfur, the ability to make clean diesel engines will come to the fore. Diesels really are a simpler solution to fuel economy issues than are hybrids because is a simpler technology."