Customers terrified after man allegedly sets Sydney car dealership alight

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Customers at a Sydney car dealership say they feared for their lives after a man allegedly torched the showroom before threatening them with a hammer.

Chaos erupted at LDV Showroom Parramatta on Church Street in Granville about 9.30am today when a seemingly disgruntled customer threatened dozens of customers inside.

He then allegedly pulled out a hammer and chased them into the car park.

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Police allege the man then poured petrol on the showroom floor and set it alight.

Customers and staff told 9News that they feared for their lives.

"He's going to kill someone, that's what I thought," a witness who wishes to stay anonymous told 9News.

A woman was treated at the scene for smoke inhalation. 

The showroom staff were able to extinguish the fire before emergency services arrived. 

A 69-year-old man was arrested at the scene and has been taken to Merrylands Police Station.