Lincoln is outperforming the luxury auto market

The US auto market set a new sales record for 2016, beating 2015's record by about 50,000 vehicles. SUVs and pickups were hot sellers, but the luxury market overall was relatively flat, up only about 1% for the year.

Lincoln, Ford's luxury brand, was an exception. Sales were up 10%, with over 112,000 vehicles sold in 2016, including a fairly strong debut for the new full-size Continental sedan in a market moving against traditional four-doors.

That's a ways behind Mercedes, the year's luxury leader with over 340,000 in US sales.

But given that the Lincoln brand was on the chopping block at Ford just five years ago, the progress the division has made in staging a comeback is impressive. December, for example, was huge. Sales were up 18% as nearly 13,000 vehicles rolled off dealer lots.

"The momentum is fantastic," Kumar Galhotra, Lincoln's president, told Business Insider. "But we recognize that there's a lot more work ahead of us."

A new Navigator

A major event in 2017 will be the launch of an all-new Lincoln Navigator, the vehicle that started the luxury SUV revolution in the late 1990s. Lincoln showed an over-the-top, yacht-inspired concept of the new Navigator, complete with massive gull-wing doors, at the 2016 New York Auto Show, continuing a theme of splashy rollouts for the automaker in the Big Apple.

"Navigator is an iconic product - it's important to us and important to our customers," Galhotra said. "It's going to be exciting to launch it in 2017."

Under Galhotra, Lincoln has joined forces with actor Matthew McConaughey for some memorable advertising - that relationship continues - and develop an offbeat brand message: "Quiet Luxury."

That message is helping Lincoln with one of the toughest jobs in the luxury car business: "conquesting" customers from other brands. It's no easy task. Lincoln has a solid lineup of sedans and crossover SUVs, but for years the brand languished in the shadows of BMW, Mercedes, Lexus, Acura, Infiniti, and crosstown rival Cadillac.

Some BMW owners, for example, haven't considered a competing brand in decades.

For Galhotra and his team, it all comes back to what he described as a "laser focus" on the customer. The Quiet Luxury angle is helping. "We believe it's unique and starting to resonate with buyers," he said.

Lincoln made good progress in the Northeast and Florida on sales in 2016 and also opened an Experience Center in Southern California, always a difficult regional market for American luxury brands. Another Experience Center is slated to open in Texas.

Big in China

Lincoln's revival in the US is attracting attention, but its rapid evolution in China is arguably more impressive.

The brand now has 65 dealerships in the country and sold over 32,000 vehicles there in 2016, three times what the brand did in 2015, according to Lincoln.

"Growth in China has been phenomenal," Galhotra said. "If you step back to November of 2014, Lincoln had no presence in China. Then we were the first luxury brand to surpass 10,000 units in our first year of operation."

Lincoln's quick success in China is a significant positive for Ford, which has lagged competitors such as General Motors and Volkswagen in the Middle Kingdom. In 2016, China was Lincoln's second-largest market, behind the US.

A significant challenge for Lincoln in 2017 will be gathering additional share in a US market that could be plateauing for sales, with luxury brands retrenching for a fight. Fortunately, Lincoln's lineup is canted toward crossover and SUVs, with only a pair of sedans (vehicles like the Continental are crucial in China, where chauffeurs aren't uncommon).

"Sedans are shrinking in the US, but they're globally important," Galhotra said. "Right now, we feel that we've got the right balance, with the appropriate SUV mix."

Galhotra did allow himself a brief moment of satisfaction with how the Lincoln story has been going.

"It was a great December and a great year," he said.