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Taieri Gorge Railway chief executive Murray Bond said the company was looking at buying a railcar capable of carrying about 50 passengers.
The railcar would operate mostly between Oamaru and Dunedin, but could also operate between Port Chalmers and Dunedin.
The railcar would not haul carriages.
The engine and passengers would be in the one vehicle.
The company had started contacting manufacturers of railcars, but there was a limited supply, because of New Zealand's narrow rail gauge, and much of the country's rail network was not electrified.
Japan was the main supplier of railcars and Taieri Gorge had been in contact with Japanese suppliers about a suitable product.
It might be able to buy a second-hand railcar.
The cost could run into the millions, but prices could change depending on availability.
Mr Bond said it might take up to five years for the car to be purchased if it stacked up financially, but there were plenty of hurdles to jump before then.
The line from Dunedin to Oamaru offered some of the most spectacular scenery in the country, and was a thrilling ride, he said.
The company already had a service, the Seasider, to Palmerston, which had proved popular, and would run twice-weekly next summer.
The company had bought 11 carriages, for more than $500,000, from Toll last year to modernise the Taieri Gorge fleet.
They would be renovated and brought into service progressively over the next few years.
Mr Bond said the company had not talked to the Government about offering services when the Government takes possession of Toll's rail operations.
He said Taieri Gorge Railway was a small operator in the southern part of the South Island.
He believed the Government was looking at companies working on a national level.