The car being red is true. Lee's jeep was Maroon. As to the other concerns about size and car type, for one thing MB only said it was a sedan initially, it wasn't until a month later that it became a smaller car. Sedans come in various sizes. He was prodded with questions for weeks, and asked about the truthfulness of his statement, and if he really saw what he thought he saw. That can change the perception a little bit. The one thing he's completely certain about, without a doubt is that the car was red. He never said what shade of red, like how dark or light, just red. Definitely RED.
Size perception changes by how far away the object is. We don't know how far away from the road the cars were initially. And if the blue car was moved further away, then it's conceivable that when he drove by again a couple times comparing the now smaller-looking blue car to the red car's image in his memory, the size of the red car became difficult to ascertain. The other thing is the curb, is it a bump or a mound;... THAT could hide the bottom of the car making it look smaller. Or did the Jeep's tires sink into the sand, with the same results. Is the terrain completely flat, or is it curved? Etc.