By Bernie Woodall

DETROIT (Reuters) - Chrysler Group LLC said it would recall 2.7 million older Jeep models after initially fighting a recall request from U.S. regulators in a dispute over crash protection for their fuel tanks.

The recall will affect Jeep Grand Cherokee SUVs from model years 1993 to 2004 and Jeep Liberty SUVs from 2002 to 2007.

While Chrysler stood by its assertion that the vehicles are not defective, the automaker acknowledged consumer concerns and said it may upgrade the rear structure of the vehicles, which have their fuel tanks situated behind the rear axle.

"Chrysler Group's analysis of the data confirms that these vehicles are not defective and are among the safest in the peer group," said a statement from Chrysler, controlled by Italy's Fiat .

The National Highway Traffic Safety Administration on June 3 asked Chrysler to recall the two Jeep models because the placement of the fuel tank leaves them less protected in the event of rear-end crash and could lead to a leak and fire.

NHTSA said on Tuesday it was pleased with Chrysler's decision to recall the vehicles, but said it will continue to investigate the issue, including a review of the documents provided by Chrysler.

The safety agency's data shows that 51 people have been killed in rear-end crashes involving the two Jeep models affected. Chrysler early this month said NHTSA's investigation was flawed, and that fuel leaks and fires were extremely rare.

Alec Gutierrez, analyst with industry consultant Kelley Blue Book, said consumers have recently been forgiving of automakers who comply with recalls.

"This outcome will not only help consumers, but also Chrysler, as there was also danger that sales could decline if they had refused the recall," said Gutierrez.

A company spokesman declined to estimate the cost of the recall.

Sandy Munro, president of consultancy Munro & Associates in suburban Detroit, said a conservative estimate of the recall's cost is $300 million.

Chrysler's net income for the first quarter was $166 million.

Resisting a recall requested by federal regulators is rare in the auto industry. The last time Chrysler fought a recall request for one of its vehicles was in 1997.

Munro said that Chrysler was being forced to "fix something that doesn't need to be fixed" and said the incidence of problems for the Jeep models is low considering how many miles they have been driven.

Chrysler earlier this month said that the Grand Cherokee and Liberty SUVs met safety requirements in effect at the time of their manufacture.

(Reporting by Bernie Woodall; Editing by Gerald E. McCormick and Tim Dobbyn)

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