Chrysler raises its profit target for 2011 on the heels of positive third-quarter results.

The auto maker says it now expects net income for the year to come in at $600 million, up from $500 million projected at the end of the second quarter.

It is forecasting its free-cash flow at more than $1.2 billion, up from $1.0 billion.

For the July-September period, Chrysler reports net income of $212 million, compared with a loss of $84 million year-ago. Revenue for the quarter jumped 18.6% to $13.1 billion.

The revenue gains result in part from a 23.7% hike in worldwide vehicle sales to 496,000, the auto maker says.

Market share rose to 11.4% in the U.S. from 9.6% year-ago and to 14.5% in Canada from 12.8%.

“This house continues to be fully focused on financial performance and making outstanding cars and trucks by fully leveraging its alliance with Fiat,” CEO Sergio Marchionne says in a statement, noting the new 4-year labor deal with the United Auto Workers union approved yesterday will “significantly reward our employees for their contribution to the revival of Chrysler.”

The new labor contract calls for $3.4 billion in investment at Chrysler’s U.S. facilities and the addition of up to 2,100 jobs.

Chrysler’s cash position was eroded to $9.5 billion in the quarter, down from $10.2 billion at the end of June, a result of “seasonal working capital fluctuations and increased capital expenditures, the auto maker says.

Chrysler Q3 2011
Financial Results
2011 2010 % Chg.
Sales $13,067 $11,018 18.6
Net Income $212 -$84 N/A
Worldwide Unite Sales 496 401 23.7
Note: Dollars in millions; Worldwide unit sales in thousands.