The late-model silver Mazda Familia sedan was heading to Dunedin about 2pm when the driver failed to negotiate a moderate bend and the car left the road near Glenfalloch, ending up in 1m of water about 5m from shore.
The two young female occupants scrambled from the car minutes before it was flipped upside down by the incoming tide.
The occupants were unhurt, but in shock after the incident, a passenger in the following car, English tourist Pauline Meade, of Rugby, Warwickshire, said.
"They were very lucky. We thought it might have been a very bad situation."
Mrs Meade and her travelling companions wrapped the women in aluminium survival blankets until emergency services arrived.
"Two people have been taken to hospital for observation and to check for hypothermia," Senior Constable Lox Kellas, of Portobello, said at the scene.
"They were lucky. People have to adjust and drive to the conditions. We've had no rain for quite a while and there's always a transition period from dry to wet."
Two people were also taken to Dunedin Hospital after a car went into the harbour at Turnbulls Bay on Friday.
