FRANKFURT - Demand for luxury sedans like the sleek new E-Class Coupe helped power a 12 percent rise in global sales of Mercedes-Benz brand cars in December, closing off an otherwise dreadful year on a brighter note.

We expect a slight increase in vehicle sales for 2010 compared to last year and anticipate we can successfully defend ourselves against the competition, said Dieter Zetsche, group chief executive and head of Daimler's passenger car division Mercedes-Benz Cars.

Mercedes will benefit this year from the full range of E-Class body styles once the Cabrio starts being delivered to customers, who can order the convertible version beginning next week.

While mass market brands like Volkswagen enjoyed a buoyant year thanks to a host of government-funded scrapping subsidies around the world, premium carmakers like Mercedes and BMW suffered the full brunt of the recession.

Since they rely on larger, more powerful and above all more expensive models that are often registered to fleet owners, scrapping programmes directed at private consumption were of little help.

Now that economies have rebounded fuelled by massive public sector debt, demand is starting to pick up once again for premium carmakers.

December marked the third straight month of gains for Daimler's luxury brand, as retail volumes increased by 12.4 percent to 97,700 vehicles.

This brought overall Mercedes sales for last year to just over 1.01 million vehicles.

More than one-fifth of that volume came from the E-Class model family, which also includes the estate version. Mercedes will have to contend with a rejuvenated competitor when BMW's next generation 5 Series debuts this year.

Daimler's Smart brand saw yet another decline in demand, however, as 12 percent fewer ForTwo models left the dealership in December. Total annual sales for Smart dropped 13.2 percent to just 117,000 units as a result. Sales of Daimler's ultra-luxury Maybach brand fell by a third to just 200 cars this year -- a fraction of the volumes that BMW's Rolls-Royce or VW's Bentley manage.

(Reporting by Christiaan Hetzner)

Daimler AG