The deadly crash occurred in a village near Valle Aurina, near Bolzano in the Alto Adige region, shortly after 1 a.m. as the Germans were gathering to board their bus.
The largely German-speaking autonomous region of northern Italy, with its ski resorts in the Dolomites and quaint villages around Bolzano, is popular with German tourists.
The driver of the car had a high blood alcohol content and was driving particularly fast, a Carabineri police official in Brunico told The Associated Press, speaking on condition of anonymity because he wasn't authorized to give his name. He said police had concluded that the car crash into pedestrians was not an act of terrorism.
The Lutago volunteer fire service said on Facebook that six people were killed at the scene. The injured, four of whom were in critical condition, were taken to several regional hospitals, including two who were airlifted to a hospital in Innsbruck, Austria, said Bolzano Carabinieri Cmdr. Alessandro Coassin.
Coassin said the driver, identified by Italian media as a 28-year-old man from the nearby town of Chienes, was arrested on suspicion of highway manslaughter and injury and was being treated at the hospital in Brunico.
The regional president of Alto Adige, Arno Kompatscher, told a press conference the victims were part of a group of young Germans vacationing in the region. Later Sunday, mourners left candles and flowers at the crash scene, which was located along a two-lane road dotted by hotels and old piles of snow in the mountainous region.
The accident occurred on the final long weekend of the Christmas and New Year's holiday in Italy, which will be capped by Epiphany on Monday.