DaimlerChrysler ‘s Mercedes Car Group has warned that operating profit for this year will decline despite a rise in car sales, as it boosts spending to improve product quality.

“We will be below last year at Mercedes,” Juergen Hubbert said, according to The Associated Press .

Mercedes’ sales reportedly have fallen this year as the premium carmaker re-launches models such as the M-class sports-utility vehicle and S-class luxury sedan.

Hubbert, however, told the news agency he expects the new A-Class, which was re-launched earlier this month, to help Mercedes record higher car sales this year compared with 2003.

“The Mercedes Car Group will sell more than last year, more than 1.2 million cars,” Hubbert reportedly said.

Hubbert said revenue this year will be “near” last year’s level, when the Mercedes Car Group had sales of €51.45 billion ($US63 billion), the Associated Press added.