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ndonesia will potentially overtake Thailand as the biggest car market in Southeast Asia this year as the country sees steady growth in its automobile market, defying a flat sales estimation, according to research firm Frost&Sullivan.

Masaki Honda, Frost&Sullivan'€™s automotive and transportation consulting director for Asia Pacific, said the automobile market in Southeast Asia'€™s largest economy would keep on growing throughout the year.

The research and consulting firm estimates that car sales will grow by 6.5 percent to 1.23 million this year. From January to May, car sales surged by 6.8 percent to 531,805, according to the Association of Indonesian Automotive Manufacturers (Gaikindo).

In contrast, market leader Thailand is expected to see its sales fall by 11.7 percent to 1.18 million by year-end after topping 1.33 million in the past year, apparently due to the ongoing political crisis.

Thailand saw steep growth in car sales after the government introduced subsidies in 2012 to help people purchase vehicles.

'€œIndonesia will also control the highest market share of 37 percent in ASEAN this year, up from 35 percent last year,'€ Honda said Monday during a media gathering at the Industry Ministry.

Apart from Indonesia, sales in Malaysia and the rest of ASEAN would offset the drop seen in Thailand throughout this year, generating overall sales of 3.5 million units as seen in 2013, Honda added.

The Malaysian car market is expected to increase slightly by 3.5 percent to 675,000 sales, while sales in the rest of ASEAN will jump by 15 percent to 380,000.

Honda further said that Indonesia would also likely see its sales of green cars expand faster due to the introduction of several low-cost green cars (LCGCs) at the end of last year, catching up with Thailand, which last year dominated the regional market of 275,000 LCGCs with a 67 percent share.

In the first four months after its launch, sales of fuel-efficient and inexpensive cars in Indonesia totaled 51,000, leading to Indonesia gaining an 18 percent share in Southeast Asia'€™s green-car market.

The regional green-car market is estimated to expand by up to 20 percent from 2013 in the next three years, according to Frost&Sullivan. The firm has yet to announce its forecast for each country.

Earlier, the firm projected that Indonesia may become a key player in the low-cost, green car regional market as the government-backed program served as a game-changer that would largely transform the landscape of the domestic industry and boost car sales. That would also allow the country to be a production base for eco cars, serving other emerging markets like Vietnam and India.

At present, Indonesia exports its LCGCs to the Philippines and Pakistan.

Industry Minister MS Hidayat said that in the future, the government would encourage manufacturers to push up export volumes. That was feasible as the installed capacity of the national automobile industry stood at 2 million units, while production stood at only 1.2 million, he added.

'€œWe are mulling whether to offer incentives for exports,'€ Hidayat said, adding that a special policy would be needed to increase export volume.

Indonesia already ships its locally assembled cars to more than 80 destinations overseas, including Latin America and Africa. Last year, it exported 170,907 complete built units (CBUs) and 105,380 sets of completely knock downs (CKDs), according to Industry Ministry data.