By Rogerio Jelmayer and Samantha Pearson

SÃO PAULO -- Brazilian vehicle sales and production slumped last year, underlining the decline of the country's once-booming car industry, as more than half of auto makers' assembly lines now lie idle.

Anfavea, the national auto makers' group, said Thursday that sales of new cars, light vehicles, trucks and buses fell 20% from the previous year to 2.05 million units, the lowest level since 2006.

Production also fell sharply, declining 11% from 2015 to 2.16 million units, the lowest since 2004.

Antonio Megale, head of Anfavea, said Brazil's auto industry ended last year operating at just 48% of capacity. Mr. Megale said the country was likely the world's 10th or eleventh-biggest producer of vehicles, down from the seventh-biggest in 2010.

"Vehicle makers in Brazil had a difficult 2016," he said, adding that he believed the industry had hit bottom. "Brazil has a lot of potential...but it is difficult to say when it will reach that potential, " he said.

While auto makers are cautiously optimistic that the industry will begin to recover this year, that recovery is set to be slow and dependent on the ability of Brazil's government to push through economic measures amid political turmoil, they say.

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Anfavea said Thursday sales of new cars, light vehicles, trucks and buses would likely increase 4% this year to 2.13 million units, with production rising 12% to 2.41 million.

In 2010, Brazil overtook Germany to become the world's fourth-largest market for vehicle sales as surging Chinese demand for commodities fueled an economic boom in the Latin American country, boosting employment and allowing many Brazilians to buy their first car.

However, in 2015 the country's auto makers were caught off guard when Brazil's economy fell into a deep recession -- a result of plunging commodity prices and a fiscal crisis at home. According the most recent data, Brazil was the ninth-largest market for auto sales in 2015.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com

(END) Dow Jones Newswires

January 05, 2017 11:55 ET (16:55 GMT)

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