Kia's 1.1 litre Picanto could be in showrooms end of 2008.

Kia puts the frugal Picanto on show in Melbourne to gauge the public's reaction.

With rising living costs Kia is driving people into smaller cars, the Picanto was on display at this week's Melbourne Motor Show to gauge interest in the compact machine.

The Picanto hatch is powered by a 1.1-litre petrol engine that produces 48kW and 99Nm.

The company showed off the Sports variant that has a five-speed manual gearbox, anti-skid brakes, leather-wrapped steering wheel and gear knob, and 15-inch alloy wheels.

“All around the world, fuel prices are continuing to rise and placing greater emphasis on fuel efficiency for cars used predominantly in urban areas,” Kia Australia president S.K. Lee says.

“Urban areas are becoming more congested and parking spaces harder to find, making smaller and more manoeuvrable cars even more attractive."

“Air travel has become much cheaper, meaning more young people choose to fly rather than drive to holiday destinations.”

Feedback from the show will decide if the company brings the car to Australia.

But Kia spokesman Jonathan Fletcher says no time frame has been put in place to make that call.

Fletcher did say that if the go-ahead was given soon, the car could be in showrooms here by the end of the year, with 2009 models set to be built in August.

That decision is dependent on public reaction to the car, and on high petrol prices and high interest rates continuing to make small cars more attractive than their fuel-guzzling counterparts.

Fletcher won't reveal a potential price for the Picanto, but to be competitive against cars such as the Holden Barina and Proton Savvy it will need to come in at less than $15,000. Kia already sells the five-door Rio hatch for $14,990.

“There are a whole heap of questions we'd need to ask South Korea,” Fletcher says