Minutes later, street vendor Duane Jackson looked over from his handbag stand across the street. He wondered what the car was doing there, since the sign said no standing anytime. He didn't see any sign of a driver.
"Initially, it was like: Why is this knucklehead parking his car" in a prohibited spot, Jackson said Sunday. He went over to look and saw a key in the ignition.
He and fellow vendor Lance Orton flagged down some mounted police officers, who went to look for themselves.
Officers were peering in the car's window "when the smoke started coming out, and then we heard the little 'pop! pop! pop!' like firecrackers going out, and that's when everybody scattered and ran back," Jackson said.
Inside the SUV was a potentially powerful bomb that authorities say may have begun to detonate but did not explode.
"We avoided what could have been a very deadly event," Mayor Bloomberg said.
"Firefighters, emergency service officers and the bomb squad responded and the bomb squad confirmed that the suspicious vehicle did indeed contain an explosive device," Bloomberg said.
It wasn't the first time the 58-year-old Vietnam veteran from Buchanan, N.Y., had been in a dangerous situation on the job. On Sept. 11, 2001, he was selling items on the corner of Wall and William streets when terrorists flew jetliners into the World Trade Center.
His latest brush with danger caught Jackson by surprise. At first, he didn't think the smoking car was that big a deal, he said.
Initially, Jackson said, he was "basically thinking that it was a car with something in the back that had caught fire, not knowing that the guy had propane tanks and gasoline.
"Now that I saw the propane tanks and the gasoline: What if that would have ignited? I'm less than 8 feet away from the car. We dodged a bullet here."
The mounted officer credited with leading the effort to evacuate the area, Wayne Rhatigan, said he was on routine patrol in Times Square, walking his horse, Migs, when he was called over to the car by a vendor.
He said he smelled gunpowder and saw that the car was running and that it had its hazard lights on. The vehicle also was parked haphazardly and smoke was pouring from it.
"I was like, 'Uh oh, this is a little bit more than a parked car and a cigarette in the ash tray," he said on Sunday as he stood beside his wife, Tina Marie, before walking into a Times Square seafood restaurant for a dinner with Mayor Michael Bloomberg.
"Everything happens so fast there's no time to be scared," added Rhatigan, who said he called other officers to help clear the area and set up a perimeter.
The emergency forced the evacuation of thousands of people from Times Square. Jackson and Orton were unable to return for their merchandise for hours.
It wasn't until early Sunday that Jackson said he was able to retrieve his items and try to catch a few hours of sleep.
Then it was time to go back to work. He was at the same spot by 8 a.m., setting up his stand, relating his experience to a throng of reporters and interested onlookers.
"The city is resilient," he said. "We're back open for business today, and the tourists are out, and we're going to do what we do on a normal basis."
Bloomberg said the bomb scare is another reminder that New York is a terrorist target and everyone has to be vigilant.
"Message, New Yorkers, is what we've been saying for an awful long time. Terrorists around the world who feel threatened by the freedoms that we have in this country and want to take those freedoms away from us always focus on the symbol of those freedoms, and that is New York City," Bloomberg said.
Watch WCBS' complete package on the Times Square bomb scare: