The blast occurred alongside a densely populated road near Hamarweyne market, an area where bombings claimed by the Islamist Shabaab insurgency have previously occurred.
"The blast was caused by a luxurious car loaded with explosives, which was detonated at a civilian, densely- populated area, and seven people were killed and several others wounded," city administration spokesman Abdifatah Omar Halane told reporters.
A witness to the blast, Ismail Ali, described the explosive-laden car detonating in the middle of the road as it was moving.
The Al-Qaeda affiliated Shabaab have been fighting to overthrow the internationally backed government in Somalia since 2007 and have repeatedly attacked civilian and military targets with gunmen and suicide bombers.