Police lost sight of the car but spotted it again on Pembroke St shortly after midday.
Officers kept watch as it travelled towards Cook St, where two of its tyres were successfully spiked about 12.30pm.
The driver then allegedly tried to steal another vehicle before returning to the damaged car and allegedly ramming a police vehicle.
No officers were injured and the police car sustained only minor damage, Gray said.
But the driver sped off again with all of the damaged vehicle’s tyres on the rims.
The fleeing-driver incident ended when a member of the public’s vehicle collided with the fleeing car on Ashley St.
Nobody was reported injured in the crash and the driver was taken into custody without incident at the scene.
Multiple bystanders filmed the small grey Nissan Tiida weaving through Palmerston North, at one point mounting a footpath.
One video showed the car speeding down Pioneer Highway with police in pursuit.
Another captured as many as seven police vehicles joining the chase, some mounting footpaths and traffic islands as they followed the fleeing driver.
Smoke billowed from the car’s bonnet as the pursuit reached its chaotic conclusion near Woolworths in The Square.
The dramatic scenes prompted a flurry of reactions online.
“Does the whole police station need to come down?” one person asked.
“Is that every cop car in Palmy?” another joked.
Others praised the motorist whose vehicle collided with the fleeing car.
Another likened the unfolding drama to a television soap opera: “Days of our Lives Palmerston North”.
“Bros couldn’t wait for GTA 6 to come out,” another joked.
The youth is due to appear in the Youth Court at a later date.
Gray said police were reviewing the incident to establish exactly what occurred.
The cordons have since been lifted and the road cleared.