Mogadishu resident Mohamed Osman said the shock of the blast hit the walls and roof of a mosque he was praying in nearby.
"When I came out of the mosque, I saw several old houses collapsed, body parts on the street, hands, legs," Osman said.
"Destroyed cars, burnt Tuk tuks (rickshaws); all this mess and loss of lives in a minute, I survived."
It was not immediately clear who was responsible for the bombing.
Osman said he had seen nine bodies at the scene. Abdikadir Abdirahman, director of Aamin Ambulance service, put the death toll at eight.
"A car bomb targeted a convoy, including bullet proof cars using Avisione street, we do not who owns the convoy. We carried eight dead people from the scene," Abdirahman told Reuters.
Earlier, a Reuters photographer saw four bodies and four damaged cars and two motor rickshaws while Ahmed Nur, a shopkeeper nearby, said he had seen at least five bodies.
A paramedic was seen attending to at least one wounded person, photographs from the scene showed.
In the past, al-Qaeda-linked al-Shabaab terrorist group has taken responsibility for similar attacks.
The group carries out frequent gun and bomb attacks on security and government targets, but also on civilians.
It also carries out attacks against African Union peacekeeping troops.