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UPDATE 1-Mexico auto exports rise in July, but pace of growth slows

(Recasts; adds details on sales, exports, comments)

MEXICO CITY, Aug 7 (Reuters) - Mexico's auto production and shipments rose again in July but at a slower pace as car sales in the United States, the top export market for those vehicles, fell for a fifth straight month, the Mexican Auto Industry Association (AMIA) said on Monday.

Mexico exported 243,056 cars in July, 7.8 percent more than the same month last year, said AMIA. That compares to a 12 percent year-on-year increase in June and a 13.9 percent jump in May.

Production in July was up 0.7 percent to 286,417 units, versus 4.9 growth in June and 17.3 percent in May.

"It seems to me that today we are facing a situation where our main markets are contracting ... So it's difficult to maintain the levels (of exports and production) we saw at the beginning of the year when we weren't seeing these types of drops," said AMIA President Eduardo Solis.

U.S. carmakers continued to slash low-margin sales to daily rental fleets in July as the overall pace of U.S. car and light truck sales fell for the fifth straight month.

The annualized pace of U.S. car and light truck sales in July fell to 16.73 million vehicles, down from 17.8 million vehicles a year earlier, according to Autodata Corp, which tracks industry sales.

The Mexican government is bracing for renegotiation of the North American Free Trade Agreement (NAFTA) with the United States and Canada, as U.S. President Donald Trump has insisted that a new pact must be fairer to his country's workers and companies.

Mexico's booming auto sector has benefited from NAFTA as major manufacturers have made the country a top export hub, attracted by cheap labor and free trade pacts with more than 40 nations.

Mexico boasts plants owned by global automakers including General Motors Co, Ford Motor Co, Fiat Chrysler Automobiles and Volkswagen AG. (Reporting by Sharay Angulo; Writing by Anthony Esposito; Editing by Sandra Maler)