The man, who got out of the vehicle with a knife, then fled - but was shot after being tracked down by officers.
A video has surfaced on Twitter purportedly showing the man's standoff with police. The driver was also seriously injured and delivered to a local hospital. Rhein-Neckar Zeitung reports that he deliberately drove into the crowd, citing eyewitnesses. The driver was tracked down by police and shot.
One of those injured in the incident, a 73-year-old German man whose identity has not yet been made public, died from his injuries at an area hospital. The vehicle the man used was a rental auto. Schaetzle did not confirm whether the man was mentally disturbed, but said that that the perpetrator likely acted alone. The city is primarily known as a university town - about a quarter of its 150,000 residents are students.
The windscreen of the car was smashed
The incident renewed fears in Germany of an attempted repeat of a terrorist truck attack last December at a crowded Berlin Christmas market that killed 12 people and injuring 50 more. In July 2016, a similar attack in Nice, France, left 86 people dead.
Police spokeswoman Anne Baas said one of the three people struck outside a bakery on Saturday afternoon was seriously injured.