Lincoln's MKZ has boosted sales for the brand in 2014. Source: Ford Motor Company

It's hard to believe Lincoln was once briefly the creme de la creme of the U.S. luxury brands. Since Lincoln sales peaked in 1990 at just over 230,000 units, it's been a long downward tumble for Ford's (F 0.08%) luxury brand -- sales barely topped 81,000 last year. To help put that figure into perspective, in 2013 the Fusion alone outsold the entire Lincoln lineup three and a half times over.


Graph by author. Source: Automotive News Data Center

One recent event has some analysts worried Ford's attempt to revive the brand isn't going according to plan, but I don't think that's the case. Here's why a luxury brand is so important to automakers and why investors shouldn't be raising red flag on Lincoln's turnaround just yet.

Why Lincoln matters
The importance of a successful global luxury brand can't be overstated in today's automotive industry -- it's nearly a must-have. Ford took a gamble when it axed or sold off multiple brands during the recession, including Jaguar and Aston Martin. It kept only its namesake Blue Oval core brand and Lincoln.

Luxury vehicles are important because they rope in incremental sales, as they don't compete with mainstream brands. The premium vehicles also haul in higher transaction prices and juicier margins; luxury brands are important for a fatter bottom line. Lincoln's decline is certainly one reason Ford doesn't trade at the high stock price multiples that its Japanese competitors with successful global luxury brands do.

Long story short: Ford needs its Lincoln brand to be a global luxury contender again, sooner rather than later. So, what recent event has worried some investors and analysts?

Why worry?
Occasionally when companies sweep events under the rug it's a red flag for investors. That's exactly what some are saying about Ford replacing Max Wolff, former design director of Lincoln. The fact that Ford promoted David Woodhouse to succeed Wolff back in December, yet the news is just now making the rounds, has raised some eyebrows.

"This is a sign that what they're doing isn't working," said John Wolkonowicz, an independent auto analyst and former product planner at Ford, according to Automotive News. "If they're trying to compete with Mercedes and BMW, they're not in the same galaxy. Lincoln doesn't have a memorable and distinctive design signature yet."

If Lincoln's turnaround story fails to take hold in the years to come, it will no doubt be a big blow to Ford's overall stock potential. Make no mistake, this is a big deal to watch, but I think it's too early to raise a red flag or give up on Lincoln's revival.

Early innings
First off, let's put this headline into perspective. This isn't Jim Farley being replaced, who was a group vice president and general manager of Toyota's Lexus before taking over the helm at Lincoln, which would be a huge red flag. Nor was Wolff let go entirely, he was reshuffled to take over exterior Lincoln designs, using experience gained from working on Cadillac's luxury lineup prior to joining Ford, to help propel Lincoln up the luxury rankings.

In addition to Ford's reshuffling not being as big a deal as some are making it, in my opinion, Lincoln is actually gaining real traction this year. Consider that Lincoln's brand sales were up 31% in March, 36% for the first quarter, and 27% over the last six months.


Graph by author. Source: Ford Motor Company sales releases

In addition to the uptrend in sales, the overall Lincoln turnaround is still in its early stages and has a couple of catalysts coming up that should help boost sales significantly.

Lincoln's redesigned MKZ and all-new MKC are just the beginning of Ford's $1 billion plan to refresh the brand's vehicle lineup. Lincoln's MKC, a small SUV, is going to hit the dealerships later this year and will take advantage of a surging small SUV/crossover segment. I expect the MKC to be a hit and should enable the company to top 100,000 sales next year, a level Lincoln hasn't reached in the last half decade and which would mark the end of its long-lasting sales slide.

In addition to the new and redesigned vehicles coming over the next couple of years, Lincoln is also going to drive onto the global stage later this year with its vital entry into the world's largest automotive market, China. Lincoln is entering China at an opportune time as the country's middle and upper class surge in numbers creating a booming luxury market that continues to expand rapidly. China's luxury market is expected to surpass the U.S. market's sales as soon as 2016.

Foolish takeaway
Analysts' concern over Lincoln's sales slide and slow revival is understandable, but it's much too early to raise the red flag over a reshuffling of personnel. The necessary catalysts to propel Lincoln much higher in sales are in place and management is focused on new vehicle launches to help successfully revive Lincoln. If and when that happens, expect investors to have one more reason to buy into Ford's stock.