A Honda Jazz overturned following a collision with a BMW M5 on the Bay Gateway at around 1pm yesterday (Wednesday, August 4).
A passenger in the Honda, a 74-year-old woman from Heysham, was rushed to Royal Preston Hospital for treatment but later died.
Following enquiries, officers believe a third BMW may have been involved in the collision but failed to stop at the scene.
A 31-year-old man from the Isle of Man was later arrested on suspicion of causing death and serious injury by dangerous driving.
He is in custody.
A BMW was also recovered by officers in the Nottinghamshire area.
Sgt Phil Baxendale, of Lancashire Police's Tactical Operations, said: "These are very sad and tragic circumstances and my thoughts are with the family of the woman involved at this time.
"There were a number of vehicles travelling close to the incident at the time and although several drivers stopped to speak to us, there are others that may have dashcam footage leading up to the collision which may prove vital to the investigation, so we are asking those to get in touch as well.
"We believe a third vehicle, a BMW, was possibly involved in the incident and we are particularly interested in speaking to anyone who might have information about this, including the driving manner of the vehicles described."
The driver of the Honda, an 82-year-old woman from Morecambe, suffered hip and facial injuries and was taken to hospital for treatment.
A third passenger, an 80-year-old woman from Morecambe, suffered minor injuries.
The driver of the BMW M5, a man in his 50s from Heysham, sustained minor injuries.
A woman in her 30s, from Heysham, was also treated for whiplash.
Anyone with information can contact police on 101 or email [email protected], quoting log number 0625 of August 4.
Alternatively, independent charity Crimestoppers can be contacted anonymously on 0800 555 111 or online at crimestoppers-uk.org.
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