'Cash for clunkers' boosts Penske earnings 23 percent

Robert Snell / The Detroit News

Penske Automotive Group, headed by Detroit auto icon Roger Penske, posted a 23 percent increase in third-quarter earnings today thanks to a boost from the federal "cash for clunkers" program and cost cutting.

The company reported net income of $27.4 million, or 30 cents a share, compared to $22.2 million, or 24 cents, from a year earlier.

Total revenue was $2.6 billion, down 13.3 percent.

"Our retail operations performed well during the third quarter, experiencing continued sequential improvement compared with the second quarter," Penske said in a prepared statement.

During a conference call with analysts, Penske said his company spent $3.3 million on an unsuccessful bid for the Saturn brand. The deal was terminated Sept. 30 after his prospective provider of new vehicles pulled out.

The Saturn deal dissolved after the Renault-Nissan Alliance decided not to proceed with plans to supply Penske with vehicles for Saturn dealers. Renault's South Korean subsidiary Samsung was expected to produce the vehicles.

Penske said his company was unwilling to proceed without a source of vehicles.

"It was a big disappointment but I think it was the right decision," Penske said.

Even though the Saturn deal fizzled, the business model might be revived. Several people have called Penske about having his company distribute their vehicle brands, he said.

"Our antenna is up," Penske said. "We will look at those (opportunities) as we go forward."