Two cars were gutted in the cellar of an apartment at Siva Nagar near Marripalem National Highway in the early hours of Wednesday.
The fire broke out in a car parked in the cellar and spread to another car parked nearby.
The incident created a scare among the residents of the apartment complex.
The residents burst crackers in the cellar the previous night and went to sleep as usual.
Police and Fire Department officials suspect that the fire could have been caused by an electric short circuit in one of the cars and spread to the other car.
The two cars were gutted even before the Fire Department personnel could reach the spot.
They were, however, able to save other cars and two wheelers parked in the cellar, according to Inspector of Marripalem Fire Station V.R.K. Raju.
A case has been registered by the police and investigation is on.