The blast is reported to have happened near the Darwish Camp, which is next to a police academy. There are fears the death toll will rise.
No group has yet said it carried out the attack, which happened at about 0830 local time (0530 GMT).
Al-Shabab militants have been blamed for similar attacks in the past.
“We saw a car speeding towards us, and it soon exploded. Every place was soon covered with flames and smoke,” local police officer Hassan Ali told Reuters news agency.
Al-Shabab, which controls much of southern Somalia, has been fighting interim government forces for control of Mogadishu in recent months.
Somalia has not had a functioning national government for 20 years.
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