NSW Assistant Commissioner Dennis Clifford said his officers were already on high alert given recent terror events in Europe and this meant they had acted quickly to prevent what could have a been a dangerous explosion.
"The police reacted very bravely and it's ... a miracle that no one else was seriously injured," he told reporters.
The man, who is now under police guard in hospital suffering very serious burns, was spotted parked in the driveway of the Merrylands Police Station, in Sydney's west, about 7pm on Thursday.
As officers approached he ignited the inside of his car and then rammed into the roller door of the underground car park.
Officers put out the fire and dragged the unconscious man from the car, which was carrying gas cylinders.
He has not been formally identified but he's believed to be in his 60s and known to police.
"It's very concerning. This is a serious incident," Mr Clifford said.
"It's a busy area. It was late night shopping. There were a lot of people around."
Investigators are trying to pinpoint the motive for the attack and say there's nothing so far to show it was terror related.
One local man told reporters he didn't feel safe living in the area and had installed cameras around his home.
Mr Clifford urged witnesses to come forward.
"If there's any mobile phone footage, as is often the case these days, that may assist us to start to put some pieces together," he said.
Merrylands has been on high alert after several terror-related incidents and raids in the past two years.
A large exclusion zone was set up while bomb squad officers examined the man's vehicle.
Hours after the incident, the white car sat empty in the car park, with smashed windows and a gas cylinder nearby.
Federal government frontbencher Christopher Pyne played down concerns the incident could be terror related.
"I understand that the Merrylands situation is not terror related or about the radicalisation of a person through Islam," he told Nine Network on Friday.
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