Fiat announced profits of 1.237 billion euros (US$1.789 billion) for the second quarter compared to a loss 12 months earlier.
The group said it was now aiming for a net profit of 1.7 billion euros for the year compared to the previous forecast of 300 million euros.
Operating profit -- a key indicator for industry -- also rose to 525 million euros from 307 million euros while sales rose 40.2% over 12 months.
Fiat took over management of Chrysler in June 2009. The iconic Italian car maker took a 20% stake in exchange for sharing technology and providing trusted leadership as the U.S. brand emerged from a government-backed bankruptcy. he Detroit-based brand had suffered from an implosion of sales for the auto sector in the United States, but was able to offer dealership networks which Fiat lacked, notably in the United States.
Fiat then steadily increased its stake in Chrysler up to a share of 53.5% after paying back U.S. and Canadian government loans. In May, Fiat said it planned to boost its stake in Chrysler to 57% by the end of 2011.
Together, Fiat and Chrysler have a combined production volume of about four million vehicles a year, which should be increased to six million by 2014 -- putting the combined company among the top auto makers in the world.
Sergio Marchionne, the chief executive officer of both Fiat and Chrysler, has said he aims to create a giant capable of rivalling the world's biggest automakers -- Japan's Toyota, GM and Germany's Volkswagen.
In February, the Fiat boss said the two car makers could be merged within two or three years into a single company with its headquarters in the United States. His comments sparked anger in Italy among trade unionists and politicians who were already up in arms over Marchionne's tough deal on working conditions at Fiat's flagship Mirafiori plant in Turin to save the factory from closure.
Fiat, an acronym for Fabbrica Italiana Automobili Torino, was founded in 1899 and has 188 factories around the world and a global workforce of 190,000.
Copyright Agence France-Presse, 2011