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fter last year'€™s decline, domestic car sales are likely to rebound this year driven by stronger economic growth and lower fuel prices, according to global research firm Frost & Sullivan.

Car sales, an indicator of consumption in Southeast Asia'€™s biggest economy, fell slightly by 1.8 percent to 1.21 million last year, the first drop in five years, due to weakening sales of commercial vehicles.

It is estimated sales will climb by 5 percent to 1.29 million this year on higher demand for passenger cars.

That figure is higher than the 1.2 million forecast by car manufacturers grouped under the Association of the Indonesian Automotive Manufacturers (Gaikindo).

Vivek Vaidya, Frost & Sullivan'€™s vice president for automotive and transportation practices in the Asia Pacific, said the optimistic outlook was attributed to stronger long-term trends in Indonesia, which include robust economic growth, an emerging middle class with annual disposable income of more than US$10,000 and sizeable investment across all business sectors.

'€œWe also expect that the fuel prices will stay low and this, coupled with the trends, will prevent the market from slowing down,'€ he said in a press briefing on Tuesday.

The government recently cut fuel subsidies to ease pressure on the state budget. The global oil price has also dropped.

The price of bellwether Brent crude has fallen to around US$50 per barrel but some analysts predict that it will rise to $78 per barrel by the end of this year.

The government expects the economy to expand by 5.8 percent this year, higher than last year'€™s 5.1 percent, which was the slowest pace since 2009.

With economic expansion boosting consumers'€™ purchasing power, car manufacturers may have room to increase prices and thus end the price war ongoing since last year.

The price war engaged in by car manufacturers amid lackluster demand has affected major auto players, such as Astra International, which saw reduced profits in the past year.

'€œThe price war will continue in the first quarter of this year. After that it will be very hard for all the players to maintain the discounts, so it will end,'€ Vaidya said.

Gaikindo deputy chairman Jongkie Sugiarto confirmed that car manufacturers reported smaller profits in the past year as they postponed raising car prices. However, this should only be a short-term policy.

'€œCar makers suffered a lot in 2014, but they endured the pain because they believe that in the longer term, Indonesia will become an extraordinary market,'€ he said.

In terms of production, car makers expect their capacity to reach 2 million units this year although Indonesia still lags behind Thailand, which is currently the largest production base in Southeast Asia.