Automobile production in Brazil rose 3.9 percent BRAOPM=ECI and sales increased 0.6 percent BRASLM=ECI in July from June, the national automakers' association said on Thursday.

Automakers in Brazil produced more than 307,000 new cars and trucks last month, while sales topped 306,000 vehicles, according to data released by industry group Anfavea.

Auto sales growth in Brazil was in the double digits in the first half, but June sales fell 4.5 percent from May as rising interest rates and government steps to curb credit raised the cost of car loans.

Brazil is an important market for the world's biggest automakers, including Italy's Fiat SpA (FIA.MI), Germany's Volkswagen AG (VOWG.DE) and U.S.-based General Motors Co (GM.N) and Ford Motor Co (F.N).

The Brazilian economy grew a hefty 7.5 percent last year and the number of middle-class citizens has grown 25 percent in the past decade, making it a crucial growth market for major carmakers as developed economies stagnate.

Newer Asian brands are also ramping up their presence. China's JAC Motors announced plans for a Brazilian factory this week, following decisions by Japan's Suzuki (7269.T) and South Korea's Hyundai (005380.KS) to start production in Brazil to capture a larger slice of a credit-fueled consumer boom. [ID:nN1E7700AK]

Still, U.S. and European heavyweights account for two-thirds of Brazil's auto sales.

Fiat retained the top spot in July, selling 67,385 vehicles, little changed from June. Volkswagen was second with sales of 59,259 cars and trucks, up 3.8 percent from the June.

GM sold 51.604 vehicles in July, a 3.7 percent drop from June, while Ford sales slipped 2.2 percent to 26,269 cars and trucks.

General motors Volkswagen Fiat SpA Germany