Emergency services were called to the blaze at the back of Sainsbury Automotive on the corner of Bourke and River streets just before 4pm.

Traffic diversions were put in place, as thick black smoke visible from kilometres away billowed from the site.

A series of loud bangs rang out as firefighters battled the blaze.

Sainsbury Automotive employees had quickly evacuated their building and gathered on the opposite side of the highway.

One employee called out names from a list to make sure everyone was safe before police moved them and onlookers past an exclusion zone several hundred metres from the site.

Inspector Gary Barber from Dubbo Fire Station said when firefighters arrived they found the Sainsbury detailing workshop alight and the fire had spread to the adjoining Dubbo City Smash & Mechanical.

Both buildings were gutted, he said, and several cars had been destroyed in the fire.

But the fire did not spread to the Sainsbury showroom, he said.

The highway remained blocked for several hours while crews extinguished the fire.

With fears of a possible building collapse, it was expected River Street would remain closed until the scene was declared safe, Inspector Barber said.

Sainsbury Automotive dealer principal Terry Green said it was a frightening incident but he was pleased no one was hurt.

"Everyone's accounted for and fine, that's the main thing," he said.

"The Sainsbury detailing shed is gone, there are probably ten cars burnt, two in the shed and others beside them. New cars, a couple of Hyundais, a Jeep, an Isuzu.

"We'll assess the damage and go from there."

A spokesperson for Orana Local Area Command said detectives were speaking to employees to try to piece together what happened in the lead-up to the blaze.

National Parks and Wildlife Service senior field supervisor David Brill was flying over the scene just after 4pm and got some aerial photographs of the scene. You can see his photos here.