June 25 (Bloomberg) -- AutoNation Inc. said the “cash-for- clunkers” law President Barack Obama signed may increase new- vehicle sales at the largest publicly traded U.S. auto retailer by 10 percent through year end.

AutoNation sold 65,698 new vehicles in the third quarter of last year through its 289 dealer franchises. A 10 percent increase from the law approved yesterday may mean “roughly” an extra 4,000 new vehicles because industry demand has been running as much as 40 percent lower than last year, according to Marc Cannon, a company spokesman.

“The fact that this incentive will be available only at new-vehicle franchises is a big advantage,” Chief Executive Officer Mike Jackson said in an interview. “At a minimum it will generate a lot of traffic.”

Automakers, led by Ford Motor Co., General Motors Corp. and car dealers, have urged the U.S. government to provide stimulus for purchases of new cars since demand began to collapse in early 2008. Sales, on a seasonally adjusted basis, have fallen below a 10 million annual rate since December. Sales of passenger vehicles through May were 37 percent lower than the same period in 2008.

AutoNation gained 91 cents, or 5.7 percent, to $16.96 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 72 percent this year.

To contact the reporter on this story: Doron Levin in Southfield, Michigan, at dlevin5@bloomberg.net

Last Updated: June 25, 2009 16:39 EDT