Vehicle sales at Daimler's premium Mercedes-Benz Cars division rose 2.0 percent to a record of just under 1.29 million units in 2007, helped by its workhorse Mercedes-Benz C-Class model and sport utility vehicles.
Sales of the Mercedes-Benz brand alone advanced 3.2 percent to nearly 1.19 million units, the German carmaker said on Tuesday.
Deliveries at its Smart minicar brand fell 10.3 percent to 100,600 units as it pared its product range to one model, the two-seater fortwo.
Sales of Maybach super-luxury limousines were steady at around 400 cars.
"In 2007 we succeeded in laying the groundwork for sustainable, profitable growth, particularly with the market launches of the new Mercedes-Benz C-Class and the new Smart fortwo," Chief Executive Dieter Zetsche said.
Daimler shares rose 0.7 percent to 59.01 euros by 8:27 a.m. British time while the DJ Stoxx European car sector index gained 1.0 percent.
Mercedes brought out a new version of the C-Class in late March 2007, giving it a crack at regaining market leadership in the premium segment from arch-rival BMW, whose new model campaign has let it accelerate past Mercedes-Benz Cars.
BMW had already clinched 2007 market leadership, after its group sales rose 8.3 percent to 1.35 million cars in the first 11 months.
Daimler sold 261,500 Mercedes C-Class cars in all of 2007 -- up 57 percent -- and is counting on an estate wagon version launched late last year to keep sales momentum going.
Sales of Mercedes-Benz SUVs advanced 6 percent to 180,100 units, it said, making the brand the best-selling premium SUV in western Europe and in Germany.
Sales of its two-seat Smart model rose 43 percent to 97,200 units in the year. It goes on sale for the first time in the U.S. market this month.
"The growing interest of American customers for fuel-efficient vehicles provides an ideal backdrop for Smart's market entry to the world's biggest car market," the company said, noting 75,000 people had signed up for information and test drives.