Mexican auto production and exports in July fell at a slower rate than in preceding months, but auto industry leaders say the numbers don't necessarily reflect a turnaround.

The Mexican Auto Industry Association, or AMIA, said Thursday that production last month fell 25% from July 2008 to 108,897 units, while exports were down 26% on the year to 90,872 units.

Domestic new car sales were 34% lower than in July 2008 at 56,443 units.

July's production and export data were significantly better than in the first half of the year, when production plunged 43% and exports sank 42%.

But AMIA President Eduardo Solis warned against taking the numbers to mean the auto sector's worst crisis in years has bottomed out. "They don't indicate a trend," Solis said.

Three of Mexico's top five auto producers - Chrysler, General Motors and Nissan - increased their output in July due either to work furloughs or backlogs in their orders from preceding months.

Chrysler's production was up 81% last month from July 2008 at 11,967 vehicles; Nissan's output of 28,672 units represented a relatively mild drop of 11%; and GM's production fell 50% to 17,722 after plunging 84% year-on-year in June.

Exports to the U.S., where Mexico sends two-thirds of its vehicle output, fell 22% in July to 62,161 cars and light trucks.

In the first seven months of 2009, Mexico's auto production declined by 41% to 711,357; exports sank 40% to 575,561; and domestic sales fell 31% to 412,732.

While a contracting global economy, rising unemployment and weak consumer confidence have been the main weight on exports and production, domestic sales have also struggled with a depreciation in Mexico's peso, said Jose Gomez, president of the Mexican Auto Distributors Association.

"The reality is that companies are contributing a significant amount to keep vehicle prices at accessible levels," Gomez said.

Industry officials hope to see production and exports improve in the second half of the year amid an expected recovery in the U.S. economy. Domestic sales, meanwhile, could be boosted by a 500-million-peso ($38 million) "cash for clunkers" program recently implemented by the Mexican government.

-By Paul Kiernan, Dow Jones Newswires; (5255) 5001 5726, paul.kiernan@dowjones.com