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Ram truck sales power Chrysler Group’s second quarter profit

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Matching a trend set last week by its domestic rivals, Chrysler Group reported healthy second quarter earnings Tuesday, helped by the strong U.S. auto market and a boom in profitable truck sales.

The Auburn Hills, Mich., automaker said it posted second quarter net income of $507 million, a 16% gain from $436 million in the same quarter a year earlier. The second quarter was Chrysler’s eighth consecutive quarter of positive net income.

Second quarter sales rose to $18 billion, a 7% increase from same period last year. Chrysler said sales of its new Jeep Grand Cherokee and Ram pickup trucks were behind the revenue gain. Helped by the rebounding housing and construction industries, pickup trucks have been the hottest segment of the U.S. auto industry this year.

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Chrysler said its U.S. market share grew to 11.4% in the second quarter from 11.2% a year ago.

“Chrysler Group is poised for a very strong performance in the second half of the year,” Chrysler Group LLC Chairman and CEO Sergio Marchionne said.

Helped by its alliance with Italian automaker Fiat, which has a majority interest in the American company, Chrysler sold 643,000 vehicles worldwide in the second quarter, an increase of 10% from a year ago.

Marchionne, who is also chief executive of Fiat, has said he hopes to acquire the roughly 42% of Chrysler that the Italian automaker does not own from a UAW retiree health care trust in the coming year.

“Chrysler is moving forward on several fronts,” said Jack Nerad, an analyst at auto information company Kelley Blue Book. “The Jeep brand has shown a steady recovery from the depths of the Great Recession, and we expect the new Jeep Cherokee to be a strong entrant in the very hot compact SUV class.”

Still, not will be all smooth sailing for Chrysler in the coming months. Chrysler warned that its operating profit for the full year could fall as low as $3.3 billion, short of its previous target of about $3.8 billion.

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“Chrysler’s lowering of its full-year guidance, when Ford, in contrast, hiked its full-year guidance last week, is concerning,” said Michelle Krebs, an analyst with auto information company Edmunds.com.

Krebs noted that as the weakest of the three domestic automakers, “Chrysler has unique challenges.”

The automaker’s products and plants were neglected for so long by its previous owners that with each new vehicle launch, Chrysler is trying to catch up to the competition, she said.

“That means it has to leapfrog some of the steps or generations of vehicles its competitors enjoyed,” Krebs said.

Also, second quarter profits were hurt by the cost of launching new models as well as a $151 million charge related to the safety recall for the 1993-1998 Jeep Grand Cherokee and the 2002-2007 Jeep Liberty.

After rejecting an initial National Highway Traffic Safety Administration request to recall the vehicles, Chrysler agreed to install new trailer hitches on the autos to reduce the risk of a fire in a rear-end collision. The charge also includes the expense of having dealers inspect the hitches on another 1.2 million Grand Cherokees from the 1999 to 2004 model years.

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Last week, General Motors Co. and Ford Motor Co. each posted second-quarter profits of $1.2 billion this week, numbers not seen since before the Great Recession and GM’s and Chrysler’s bankruptcies and bailouts.

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Follow Jerry Hirsch on Twitter @LATimesJerry, Facebook and Google+.

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