(Adds details of forecasts, sales by brand)
By Alberto Alerigi and Brad Haynes
SAO PAULO, April 7 (Reuters) - Auto production in Brazil is likely to fall this year to its lowest level since 2007, national automakers association Anfavea said on Tuesday, adding to concerns of more layoffs and slowing investments in the keystone industry.
Output is likely to drop 10 percent in 2015, according to Anfavea, slashing its January forecast of 4 percent growth for the year. The group expects domestic auto sales to plunge 13 percent this year, down from its prior estimate of 4 percent growth.
Production fell 15 percent last year and sales slid 7 percent, but the crisis for global automakers in Brazil seems to only be deepening as a stagnant economy, accelerating inflation and crumbling consumer confidence batters the industry.
President Dilma Rousseff has also withdrawn emergency measures for car makers, rolling back tax breaks that had been dragging on government finances since 2012.
With little hope of a quick recovery, automakers have been cutting deeper into payrolls in an attempt to cut costs and reduce unused capacity. Employment in the auto industry, which contributes a quarter of Brazil's industrial production, fell over 9 percent in March from a year ago, according to Anfavea.
New industry data on Tuesday showed that auto output had fallen 16 percent in the first three months and sales dropped 17 percent, compared with the first quarter of 2014.
Global car makers including Fiat Chrysler Automobiles NV , Volkswagen AG, General Motors Co and Ford Motor Co invested heavily in Brazilian operations over the past decade as domestic sales doubled, making the country one of the world's five biggest auto markets.
According to Anfavea: Fiat remained Brazil's top seller of cars and light trucks in March with almost 40,600 new registrations. GM surged from third into second place, selling just over 37,000 passenger vehicles, ahead of VW's nearly 34,900 new registrations. Ford sold around 23,000 vehicles. (Reporting by Alberto Alerigi Jr. and Brad Haynes; Editing by Chizu Nomiyama and Gunna Dickson)