The vehicle appears to have been rigged to explode when the driver turned on the engine, according to a police official in Aden.
The official said the victim was a British citizen working for a shipping company in the southern port city.
But other witnesses said they believed the man was a Dutch national.
Police officials have told the Associated Press the victim worked for the Aden-based Arab Company for Inspection and Marine Consulting.
A Western shipping source in Aden said the man had just returned to the coastal town after surveying a tanker attacked by pirates off Yemen's coast in early July.
The man was a well-known and long-time resident of Aden, adding that he believed the explosion was a militant attack, according to a security official.
Eyewitnesses have described the vehicle bursting into flames as soon as the car started, shattering windows in nearby buildings.
"He started the car and it immediately exploded and he was engulfed in flames," said one witness.
One passer-by was critically injured in the blast, which also damaged nearby buildings, a municipal official said.
Yemeni officials have blamed a rise in violence in Aden on al Qaeda-linked militants they say are taking advantage of turmoil arising from an uprising against President Ali Abdullah Saleh's rule. Source