Volvo sold 465,866 cars over the year, a number higher than the company's previous best from 2007 and 9 percent more than in 2013.
The group, which has belonged to Chinese automaker Geely since 2010, welcomed in a statement the "strong growth in China and western Europe."
In China, now Volvo's biggest market, sales soared by 33 percent compared to 2013, more than double the increase for the car market as a whole. The automaker benefited from a good image among consumers, with full Chinese ownership of three plants in the country.
In western Europe, Volvo's sales increased by 11 percent, with notable bright spots in Sweden, where sales rose by 17 percent, Germany, up 18 percent, and Great Britain, up 26 percent.
But in what was once the company's main market, the United States, sales dropped by 8 percent.
Volvo Cars has given no indication of its financial results. Geely, after accumulating losses until mid-2013, has begun to operate at a profit.
"This sales growth is set to continue in 2015 and beyond as we set about replacing our entire model range in the next five years," said Volvo's vice president of marketing, Alain Visser.
In December Volvo announced a new marketing strategy that includes fewer motor shows, less sports sponsorship and a greater emphasis on online sales.