At least 30 people were injured after a car ploughed into a carnival parade in the western German town of Volkmarsen, police said, adding that the driver had been arrested.

German prosecutors and police said the suspect, a 29-year-old German citizen, was being treated for injuries sustained in the incident and they were looking into all possibilities.

He had been arrested on suspicion of attempted homicide, according to police.

"This is a terrible day, this is a terrible deed," said Peter Beuth, interior minister of Hesse, the western German state where Volkmarsen is located.

A third of those injured were children, he said, and police still had no indication of the possible motive.

"It can be assumed that it was intentional," a police spokesman said at the scene, where debris from the carnival littered the ground and a silver Mercedes-Benz car that appeared to have been involved was taped off by police.

German media reported witnesses saying the driver appeared to have deliberately driven his car into the crowd.

Police cars and ambulances rushed to the scene in the small town, which is 420 km west of Berlin.

German media said the driver deliberately broke through plastic barriers set up by police around the parade area, where 1,500 people were expected to gather.

The car continued driving through the crowd for about 30-metres before coming to a halt, a witness told local broadcaster Hessenschau.

The incident comes less than a week after a man killed 11 people, including himself, in the town of Hanau, near Frankfurt.

A spokeswoman for police in Volkmarsen said "it is too soon" to say whether the driver ploughed into the crowd on purpose.

Pictures from the scene showed police officers and rescue vehicles next to a silver Mercedes hatchback with its doors open, having apparently come to a halt outside a REWE supermarket.

German police said on Twitter that all carnival parades in the German state of Hesse have been called off as a precautionary measure.

Carnivals are hugely popular in parts of western Germany, especially in Rhineland cities such as Cologne and Duesseldorf, where festivities peak on "Rose Monday" with tens of thousands attending street parades featuring comical or satirical floats.

In 2016, a Tunisian man with Islamist militant ties ran a truck into a Christmas market in Berlin, killing 12 people.

He was later shot dead by Italian police after he fled Germany.