On or off the track, Roger Penske has a reputation for turning things to his advantage.

Roger Penske has a way of turning things to his own advantage.  And the recently-concluded Cash-for-Clunkers program provided him yet another opportunity to work that corporate magic.

The Penske Automotive Group, run by the Detroit-based entrepreneur and motor sports legend, posted a solid 23% increase in third-quarter profits with the federally-funded program, designed to drive up domestic car sales, providing a significant boost.

The group’s net income came to $27.4 million, or 30 cents per share, up from $22.2 million, or 24 cents per share, the year before.  Excluding one-time charges, earnings came to 34 cents a share, a bit ahead of analyst forecasts.  Revenues fell 13%, to $2.6 billion.

The upturn reflects a variety of factors, including aggressive cost-cutting.  But the Clunkers program, officially known as CARS, or the Car Allowance Rebate System, added significant momentum to Penske’s performance in several ways.

The group serves as the U.S. distribution arm for German automaker Daimler AG’s Smart minicar unit, which received a sizable number of new buyers under CARS, which provided rebates of up to $4,500 for motorists trading in on a more fuel-efficient vehicle.  That helped offset what has been an otherwise bad year for Smart, which sells a 2-seat urban commuter car.

Even with the Clunkers boost, Penske noted Smart sales are down 32% for the year, and the unit is now expected to move just 15,700 cars.  Original expectations called for sales to remain flat, despite the economic downturn.

Penkse’s diverse operations also include one of the nation’s largest auto dealer networks, with 310 individual auto franchises.  In a prepared statement, the silver-haired executive noted that, “Our retail operations performed well during the third quarter, experiencing continued sequential improvement compared with the second quarter.”

There were some problems for Penske during the quarter.  A month ago, the group was forced to abandon an ambitious bid to acquire General Motors’ Saturn division, one of four brands the giant automaker is abandoning as part of its bankruptcy reorganization.  GM had said it would provide product only until 2012, but Penske’s bid to find an alternative supplier when French automaker Renault backed out of a proposed deal.

The Penske Automotive Group, based in the Detroit suburb of Bloomfield Hills, had to write down a $1.9 million charge because of the failure of the Saturn takeover effort.

Other major auto retail chains, such as AutoNation and Sonic Automotive, are posting improved earnings for the third quarter, also do to the CARS program.  But the numbers could be significantly weaker for the next quarter, as the industry had a significant “payback period” of sharply lower sales once the Clunkers program wrapped up.

Retail auto sales are showing some signs of recovery, and could hit 10.7 million, on an annualized rate, in October, according to Mike Di Giovanni, chief market analyst for General Motors.  But earlier this week, Di Giovanni cautioned that this still “isn’t great.  It is a level we haven’t seen since the 1980s.”

With new government data showing the nation out of recession, but with the economy still expected to grow very slowly, investors have shown wariness about the near-term potential of various auto retail stocks.