One male and a female occupant were left injured.
Second later, shots were fired from another vehicle.
The occupants of the 4x4 then set their vehicle alight and fled the scene, while the fire spread to the VW Golf and a nearby house.
After the disorder, two people were taken to hospital; a man with a gunshot injury, and a woman who injured her legs in the collision. They both remain in hospital.
West Midlands Police say the man's condition is serious but stable. The woman's injuries to her legs are not thought to be life-threatening.
As police continue their investigation, officers have arrested a woman, aged 34, on suspicion of conspiracy to commit murder.
She is still being treated for her injuries in hospital and will be questioned at a later stage.
A man, 20, has been arrested on suspicion on possessing a firearm with intent to endanger life.
He is also being treated for his injuries and will be questioned at a later stage.
Another man, 26, has also been arrested on suspicion of possessing a firearm with intent to endanger life. He remains in custody.
Also in custody is a man, 33, who has been arrested on suspicion of assisting an offender.
While the investigation continues, officers have recovered a Volkswagen Polo in Tame Street, which is close to where the incident happened, which they believe was involved.
It will now be forensically examined, but officers are still looking for the occupants.
Officers believe the incident was a targeted attack.
Superintendent Clare Caddick, from Walsall Police, said: "What happened yesterday in broad daylight is shocking and we recognise the concerns of our communities.
"This level of violence was unnecessary and reckless. We’ve increased patrols in the area to offer reassurance and welcome anyone who may be concerned to talk to local officers.
"Detectives are working diligently to determine exactly what happened and why, as their investigation continues at pace.
"We’ve had lots of witnesses come forward, I thank you for this − however I’d urge anyone who knows anything, but hasn’t yet got in touch, to do so as soon as you can."
Anyone with information is asked to contact the police, quoting log 2022 of May 4.
Alternatively, contact Crimestoppers anonymously on 0800 555111 or at crimestoppers-uk.org