A Cadillac ATS shown during filming of the sports sedan's debut ad campaign.

It was, to mangle Charles Dickens, the best of times and the worst of times for the two domestic luxury makers last month.

For Cadillac, January brought a sign of vindication suggesting that, after a slow start for the 2013 model-year, critical new products like the compact ATS sedan are finally building the sales momentum needed to help restore General Motors’ flagship brand to its former luster.

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For Lincoln, however, January delivered an unexpected setback, sales plunging by 73%, year-over-year, despite parent Ford Motor Co.’s strong aspirations for the luxury brand’s new MKZ sedan.

While Lincoln’s numbers plunged 18%, to their lowest level since the Reagan era, Cadillac posted its best performance at the retail level in 23 years, demand overall surging by 47%.

The new Lincoln MKZ reached showrooms late in 2012 and production has only slowly been ramping up.

“When you look inside the numbers, we’re even more encouraged to see our products building momentum, drawing new luxury consumers and expanding our brand,” said Chase Hawkins, vice president of sales for Cadillac.

The executive pointed to two key products for building brand momentum, the SRX crossover-utility vehicle and the new ATS sedan. Roughly the size of a BMW 3-Series, Caddy’s new 4-door has been winning wide praise since its launch last year, most notably being named last month the North American Car of the Year by a panel of 49 U.S. and Canadian journalists.

To industry analysts, one of the most significant measures of Cadillac’s rebound is the fact that it is rapidly gaining converts in the retail market, rather than by pumping cars into fleets, as it had done in the past. A full 94% of the brand’s sales were racked up at retail showrooms last month.

Of course, January alone won’t guarantee that Cadillac – which long billed itself the “standard of the world” – has truly recovered.  The maker has, in fact, been promoting its “renaissance” for more than a decade, ever since it introduced the dramatic “Art & Science” design language with the launch of its original CTS sedan.

But after some early signs of success, the promised revival faltered as consumers turned their backs on other edgy designs, such as the bigger STS sedan and the XLR sports car.

The arrival of the ATS and the XTS, the latter also new for 2013, appear to be putting the brand back on track, but analysts caution Cadillac will need to continue building momentum month after month.

And it will face another big test when it reveals the third-generation CTS sedan later this year. The first versions were so-called “tweener” cars, according to analyst Jim Hall, of 2953 Analytics, in Detroit, falling somewhere between the BMW 3-Series and 5-Series models.  With the ATS directly taking aim at the smaller of the Bavarian models, the 2014 CTS will move up in size – and price.

Cadillac has even more ambitious product plans in the works, including a replacement for the massive Escalade sport-utility vehicle. And it has hinted at product development programs underway that could result in a variety of other much-needed offerings, including a compact crossover, a convertible and other models.

For its part, Lincoln also is looking to broaden its appeal with a newer, more modern design language that will be shared across an expanding line-up of products. It has announced plans to introduce four new models by 2014 while Ford CEO Alan Mulally recently confirmed in a DetroitBureau.com interview that even more vehicles are now under development for the rest of the decade – including Lincoln’s first rear-drive passenger car since the aging Town Car was pulled from production.

The MKZ is the first step in Lincoln’s revitalization. But despite generally positive reviews, and what Lincoln officials had claimed to be record advance orders, January did not deliver a strong launch.

The entire brand’s line-up generated just 4,191 sales – less than the total for the Ford division’s Fiesta – and the lowest monthly tally since July 1981.

Despite that weak performance, company officials put as positive a spin on the results as possible.  A key reason for the slow take-off, they stressed, was not a lack of demand.  If anything, there are more customers waiting in line than for any product in Lincoln history, asserted Ken Czubay, Ford’s vice president of sales, marketing and service.

But in light of the problems the parent company had with the debut of the Ford Fusion – which shares the same underlying platform with the Lincoln MKZ – it’s perhaps no surprise the maker is putting the luxury sedan through a rigid inspection process that has sharply reduced production rates.

“We are going over them as we have never gone over vehicles before,” said Czubay, during a conference call discussing Ford’s January sales. “As we re-launched Lincoln … we know the quality finish of all of our competitors,” and wanted to ensure Lincoln would match the best it will face off against.

Despite the short supply, Lincoln went ahead with plans to advertise the new model – and to emphasize the brand’s transformation – on the Super Bowl, perhaps the highest-profile venue an automaker can participate in all year.

Lincoln took some flak when it previewed its Super Bowl campaign on Youtube, Mark Simon, the chief creative officer at Detroit’s Campbell Ewald – an ad agency that, until recently had long represented Chevrolet – offered a put-down on Twitter. The spot, chided Simon, “doesn’t change my opinion about the brand.”

Whether potential luxury buyers will agree remains to be seen, but it’s clear that Lincoln, like its cross-town rival, Cadillac, will have to change plenty of minds as it struggles to regain its former glory. And that will be all the more difficult considering the solid gains by rivals ranging from Porsche – which set a new sales record in January – to Lexus, Mercedes-Benz and BMW.

Both U.S. luxury marques have slipped well behind the imports and face the fight of their corporate lives to win back buyers. Ford Cadillac, January showed signs that this just might be possible. For Lincoln, the New Year is off to a worrisome start.