'In February we had a shipment of 42 cars to be delivered to customers and that's the highest ever recorded - the second highest was 25 cars in 1996,' Mr Rushworth said.

He said buyers of luxury European cars also benefited from a deflated euro that made costs equal to or, in some cases, cheaper than, Japanese alternatives.

A Mercedes-Benz spokesman said the company had registered a 10 per cent increase in sales from 2000 to 2001, and another increase was expected this year.

Sales at the Grand Hyatt's Champagne Bar had risen 18 per cent in the past three months, with customers favouring French champagne, a spokeswoman said.

She said the rise was mainly attributed to a happy hour promotion of Moet champagne, selling at $100 a glass instead of $170.

Across town, the Peninsula has seen its food and drink revenue for the first quarter of this year remain similar to levels last year, according to a spokeswoman, who said it was a good indication of things to come.

A spokesman for luxury clothes maker Burberry said the brand had experienced 'encouraging growth' since December and was optimistic about the coming season.

'Our clients tell us that there is no point in being pessimistic as they can help the economy by spending,' she said.

Spokesmen for Chanel and Daks agreed that the luxury market had hardly suffered and attributed the buoyancy to a loyal customer base which ensured the companies were barely affected by the downturn.

Daks recorded five per cent growth from July to last month, compared with the same period a year ago, and there had been a slight increase in the weeks after the September 11 terrorist attacks, general manager Akira Inoue said.

Hong Kong University of Science and Technology marketing associate professor Dilip Soman warned that the increase in consumption of luxury goods may only be temporary.

'People realise things will only get worse and as a result they feel like splurging now that they can afford to. If we start seeing a decline [in consumption] in the next six months, it is because people have not been prudent soon enough,' Professor Soman said.

'For many people a recession is still something that happens to other people until they themselves fall victim, so individual responses are delayed.'

He said the phenomenon was exacerbated in Hong Kong's economy, where the gap between rich and poor is wide.

'The rich have adapted to an extravagant lifestyle and their response to a recession is to work harder to maintain the lifestyle. As a result, the lower income rungs feel pressured to spend more, too.'

The university's brand expert, Professor Rashmi Adaval, said brand names gave security to consumers seeking the familiar during times of trouble.

Graphic: LUX14XGET