UPDATE 2-Penske profit up on cost-cutting

* Q3 adjusted EPS $0.34: Street view $0.28

* Revenue down 13 pct to $2.6 bln

* Cost-cutting, Cash for Clunkers boost earnings

DETROIT, Oct 30 (Reuters) - Penske Automotive Group (PAG.N), the No. 2 U.S car dealership group by sales, reported a 23 percent increase in quarterly earnings Friday on cost-cutting and a boost from the U.S. government's "Cash for Clunkers" program.

Net income rose to $27.4 million, or 30 cents per share, from $22.2 million, or 24 cents per share, a year earlier.

Excluding one-time items, such as charges related to its late-September decision to scrap a plan to acquire the Saturn brand from General Motors Co [GM.UL], Penske posted adjusted earnings of 34 cents per share. Analysts, on average, had forecast 28 cents per share, according to Thomson Reuters I/B/E/S.

Revenue fell 13 percent to $2.6 billion, in line with analysts' expectations.

Other major U.S. auto dealerships also reported higher earnings this week after slashing inventories and staff as U.S. auto sales slumped to the lowest level since the early 1980s.

AutoNation Inc.(AN.N), Asbury Automotive (ABG.N) and Sonic Automotive (SAH.N), three of the other top auto retailers, said they expected that the worst of the industry's downturn had passed although the recovery would be slow.