Initial estimates show that sales in the combined automaker group rose to about DM 260bn ($155bn), up 13% from a 1997 total of DM 229bn.

The company gave no profit figures, but said earnings for the year were expected to reach a "significantly higher level" than the combined figues for 1997. Earnings figures are expected to be released in February or early March 1999.

"Marriage made in heaven"

The two car makers officially joined forces in November this year in what DaimlerChrysler chairmen Jürgen Schrempp and Robert Eaton called a "marriage made in heaven". The merged company is the world's fifth-largest carmaker with a market capitalisation of $42bn.

In a statement the chairmen forecast that 1999 would show "the first positive effects" of the merger: "Our integration teams are well on the way to defining and beginning the synergy projects, which will be reflected in the 1999 business figures."

DaimlerChrysler said it had created 13,000 jobs in 1998, taking its workforce total to 434,000 people.

Of all units Mercedes was a particularly good performer, with sales increasing by more than 20% to a DM 60bn ($36bn) record, while Chrylser's figures were boosted by its Jeep Grand Cherokee and 300M cars to DM 115bn ($68bn) - yet another historical best.

The company refused to comment on a report in the German magazine Der Spiegel that it would raise its dividend to Chrysler levels as early as this year. There had been speculation that the company would phase in the changes as Daimler traditionally paid out less to its share holders than its US partner.

A company spokesman said the company expected its 1998 dividend to be "substantially higher" than the DM 1.60 Daimler-Benz AG paid in 1997.