The driver rammed through police cars and continued fleeing from police before crossing the centre line and crashing head-on into a Honda Jazz.
Canterbury police district commander Superintendent Gary Knowles said a policeman was thrown onto the bonnet of one of the police cars the BMW rammed, and had minor injuries.
The three elderly people travelling in the Honda were taken to Christchurch Hospital.
Yaldhurst Rd resident Paul Bridgman said he came home with his children at about 5.45pm, and saw a police car and one other car with their noses in a deep ditch.
He saw a third vehicle in the middle of the road and said it appeared to have been "t-boned".
Mr Bridgman said he saw about eight members of the Armed Offenders Squad on Yaldhurst Rd, "completely dressed top to toe in black with black helmets on." They did not have their guns out at that point.
As Mr Bridgman was heading home an ambulance went past with its lights on and shortly afterwards he saw a fire engine leave the scene.
"It took a long time to get home, I had my kids and the road blocks kept moving."
A Christchurch Hospital spokeswoman said one woman was in a serious but stable condition and another elderly woman was critically injured and in intensive care this morning. The third Honda occupant, a man, was in a stable condition.
The Fire Service cut free three people from the BMW and two of them were in a stable condition in Christchurch Hospital under police guard overnight. The BMW driver was in police custody.
The pursuit and crash have been referred to the Independent Police Conduct Authority.
Mr Knowles said a criminal inquiry was also underway.
