The explosives-packed car went off in the upscale Sunni-dominated Mansour district, two police officers said. The blast narrowly missed a passing convoy of employees working for an unidentified security company. Three policemen at a nearby checkpoint were among those wounded in the attack, the officers said.
A medical official in a nearby hospital confirmed the casualty figures. All officials spoke on condition of anonymity because they were not authorized to talk to the media.
Violence has dropped in Iraq since the height of the insurgency a few years ago but militants still stage assassinations and other deadly attacks nearly every day.
The country also sees occasional large-scale bombing offensives, often in multiple cities on a single day, attributed to the Sunni-dominated al-Qaida in Iraq. The group has for years sought to undermine Iraq's Shiite-led government with attacks against the security forces and Shiite civilians.