(Adds details of monthly sales, background)
SAO PAULO, Dec 5 (Reuters) - Production and sales of motor vehicles in Brazil fell in November as weaker demand and high inventories kept pressure on the local auto industry.
Automobile output dropped 10.7 percent and sales fell 8.3 percent from October, national automakers' association Anfavea said on Thursday.
Stagnant demand for cars despite heavy tax incentives from President Dilma Rousseff underscored expectations that sales in Brazil will contract this year for the first time in a decade. Registrations through November slipped 0.9 percent from the same period of 2012.
Brazil is the world's fourth-biggest auto market, with Italy's Fiat SpA, Germany's Volkswagen AG and U.S.-based General Motors Co and Ford Motor Co selling more than 70 percent of new cars in the market.
Fiat remained Brazil's top seller of cars and light trucks in November, with about 59,700 new registrations. VW regained second place from GM, selling some 53,100 passenger vehicles compared with the U.S. automaker's roughly 51,400 cars and light trucks. Ford sold about 26,600 vehicles.
French car maker Renault SA barely kept its lead over Hyundai Motor Co with about 20,800 new registrations versus the Korean rival's roughly 19,200 sales.
(Reporting by Alberto Alerigi Jr. and Brad Haynes; Editing by Gerald E. McCormick and Chizu Nomiyama)