A body slumped in the driver's seat of a partially burnt-out Ford Fiesta was discovered just after 2.15am on Tuesday.
Police were called to North Parramatta and found the vehicle alight.
After extinguishing the blaze, firefighters found the body in the hatchback.
Superintendent Barry Vincent said police were treating the scene as suspicious and were following up reports of gunshots heard in the area about the time of the fire.
"We're certainly keen to speak to that person who may have heard gunshots to contact us on Crime Stoppers," Supt Vincent said.
"There may have been a fuel source but what that is, I couldn't say definitively at the moment."
Neighbours said they heard what sounded like gunshots, with two or three ringing out shortly before police were called.
Another said she heard the sound of screeching tyres at the end of the street, believing the noise to be a getaway car.
"I heard there was like a 'pop pop' kind of sound but I didn't think too much of it," Liza Bak told Nine News.
Police were seen scanning a nearby sporting field and bushland while detectives went door to door interviewing neighbours.
The discovery came two hours after emergency services found a Toyota RAV4 ablaze at the Waterfall Flat car park at Waterfall in the Royal National Park south of Sydney.
Firefighters extinguished the blaze before finding skeletal human remains inside the rear of the vehicle.
"It is too early to tell whether those matters are linked in any way," Supt Vincent said.
Two crime scenes have been established and forensic examination is under way to determine the identities of the victims.
Homicide detectives are investigating the Parramatta blaze.
"Obviously we're keen to find out who this person is as soon as we can so we can make sure the necessary updates are provided to family who may well be unaware of what happened," Supt Vincent said.
Police are appealing for anyone with information or footage of the incidents to come forward.
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