CHANGSHA - A Chinese rail maker announced on Friday that it has developed a type of smart bus to tap China's lucrative urban transit market.

The ART, Autonomous Rail Rapid Transit, was developed by the research arm of CRRC Zhuzhou Locomotive Co Ltd, which produces key parts for China's high-speed railway.

A standard bus is about 30 meters long and equipped with sensors that can read the dimensions of roads and plan its own route, said Feng Jianghua, chief engineer of the institute.

"It is like having a virtual rail for the bus," said Feng.

A standard bus has three carriages with a capacity of 300 people. A five-carriage bus can hold as many as 500 passengers. Feng said it holds more people and is easier to maneuver than a regular bus.

"There is huge demand for urban transit systems with China's urbanization drive," Feng said.

Most medium-sized and small cities cannot afford expensive subway systems, or the systems take too long to build, he said.

It costs around 400 to 700 million yuan ($58 million to $102 million) to build a kilometer of metro.

A standard-length ART bus costs around 15 million yuan ($2.2 million), or even less, said Feng.

According to the government of Zhuzhou city in Hunan province, a 6.5-kilometer ART line will be built through downtown Zhuzhou and operations will start in 2018.