DaimlerChrysler says it expects its profitability to increase further in 2006, helped by an improved performance by luxury unit Mercedes-Benz.
The Mercedes-Benz division is returning to profitability
Reporting its 2005 results, the German-US group saw its net profit rise by 15% to 2.85bn euros ($3.4bn; £2bn).
Annual sales rose 2.7% to 4.8 million cars worldwide.
Mercedes made a loss of 505m euros for the year, hampered by its struggling Smart subsidiary, but returned to profit in the fourth quarter.
It made an operating profit of 1m euros in the last three months of 2005.
This may not appear a lot, but it is significantly better than the 119m average quarterly losses expected by analysts.
Mercedes' return to profitability has been helped by 8,500 job losses.
"DaimlerChrysler made significant progress in 2005," said chairman Dieter Zetsche.
Profits at the group's US Chrysler unit were up 7.5% for the year to 1.5bn euros.
"DaimlerChrysler expects an improvement in profitability in 2006, with continuous increases in operating profit during the following years," it said.
DaimlerChrysler announced at the end of last month that it was cutting 6,000 management jobs over the next three years, in an effort to achieve 1.5bn euros of savings a year.