The three-vehicle crash happened at the traffic lights at the turnoff into the shops with one vehicle becoming submerged.
Police investigation underway
A police spokeswoman said police were working with CCTV operators and members of the public to establish the events leading up to the crash.
"Early indications are that three vehicles were involved in the collision. It's understood the vehicle in the water had two occupants, a second vehicle had another two occupants, and a third vehicle had one occupant.
"Police Serious Crash Analysts are still in the early stages of the investigation. The exact cause is yet to be determined," the spokeswoman said.
Police acknowledged those members of the public who helped at the scene and would like to hear from anyone who witnessed the crash. Information can be provided to police via 105, quoting file number 211208/1665.
Alternatively, information can be provided anonymously to Crime Stoppers on 0800 555 111.
"It went down real fast"
Witness Errol Hodgson told the Bay of Plenty Times he was driving home from work when he saw two vehicles crash at the Chapel St lights then a third, an SUV, come "out of nowhere".
"The SUV went up over the island and straight over the edge [into the water].
"It went down real fast.
"I stopped here [about 20m away] and ran over there. The rear window was disappearing.
"The windows must have been down because it went down so fast, it was ridiculous."
He said a man got out of the sinking car himself.
"They tried to get the other person out. They were there a long time. The car kept moving down there because of the currents. It's still there.