By Soyoung Kim

DETROIT (Reuters) - Auto parts maker ArvinMeritor Inc (ARM.N: Quote, Profile, Research) posted better-than-expected quarterly profit on Tuesday on cost-cutting and gains in sales of commercial truck components in South America, Europe and Asia.

The supplier reaffirmed a full-year earnings outlook that topped Wall Street expectations despite an ongoing slump in car and truck sales in the United States, still the world's largest auto market. ArvinMeritor shares rose more than 8 percent.

Executives cautioned that the auto industry was being hit by rising commodity costs with steel producers demanding surcharges for shipments and said they would seek to pass on higher prices to customers, including major automakers.

"We have some hard discussions coming up with both the suppliers and the customers," Chief Financial Officer Jim Donlon told analysts and reporters on a conference call.

"The bottom line is that we cannot and we will not be the ones to bear the increases."

ArvinMeritor also said it had held preliminary talks with the United Auto Workers union on transferring retiree costs to a trust fund, similar to the deal pioneered by Goodyear Tire & Rubber Co (GT.N: Quote, Profile, Research).

The UAW has struck similar deals with three Detroit-based automakers as part of a four-year contract reached last year. Under the agreement, the automakers agreed to make one-time payments of billions of dollars into trust funds for retiree health care in exchange for being allowed to step clear of those liabilities.

"From our side we would be interested in some arrangement like that. We've had some early discussions about that," Donlon said.