A man has been arrested after driving his car into a crowd of people outside a bar in southern France while shouting Allahu Akbar, witnesses and local officials said.

The 32-year-old suspect, believed to be a local, sped towards a crowd of about 50 outside the bar at around 1am Friday local time, witnesses said.

However, his white Peugeot ran into barriers set up for the town's annual grape-harvesting festival featuring bull-fighting which attracts thousands of people.

Police inspect the scene outside a bar in the southern French city of Nimes after a man drove his car into a crowd standing outside early Friday morning, injuring two people

Two people standing behind the barriers received slight injuries to their legs.

After the crash the man tried to flee but was dragged to the ground by onlookers and 'roughed up' before police arrived.

He was in a state of 'mental confusion' during his arrest and has been hospitalised, public prosecutor Eric Maurel said .

Several witnesses told AFP that the man shouted 'Allahu Akbar' - God is Greatest in Arabic - during the incident.

A source close to the investigation said the man was not known to police for suspected radicalisation.

The man is being held on suspicion of attempted murder.

A police spokesman declined to comment on the man's motives, but said the investigation was being handled by regular police rather than anti-terror police.

Around 50 people were gathered outside L'Instant T bar at 1am when the car smashed into security fencing set up due to the city's grape-harvest festival this weekend (not pictured)