He added: 'The NARO is a third of the weight of a typical saloon car, occupies a third of the space and uses less than half the fuel and will be capable of 100mpg, making it an attractive cost-effective proposition.
The idea has received funding through the Welsh Development Agency to research the feasibility of the NARO.
Andrew Davies, economic development minister, said: 'The NARO car is an exciting concept.
We are confident there will be market demand for cars like the NARO, particularly in our cities,' said Mr Kemp.
The NARO is a third of the weight of a typical saloon car, occupies a third of the space of a conventional car and uses less than half the fuel.
As traffic congestion increases and fuel costs rise, I think vehicles like NARO could soon become a familiar sight on our city roads and, who knows, you may soon be hailing one of these rather than a black cab.
The search is underway for financial backers to help launch the NARO in 2008, with plans to produce 1,500 a year in Wales.