Also applies to humongous "manly" vehicles that are not allowed to wear dirt, let alone get driven on it. Glossy Hummers, pinstriped pickups, and similar macho-but-impractical trucks and SUVs that cruise cities and suburbs.
Derogatory word applied to a vehicle used by a guy that wishes he can afford to drive those so-called "small penis vehicles" (vehicles that seemingly are overcompensating for a guy's "under-endowment." Examples include but are not limited to: fancy sports cars, and large trucks such as F350s that are raised with a set of over-sized tires). He may also be likely doing this to make himself feel better about his small penis.
I think it's funny that poor people always dismiss men that drive nice cars by saying they must be compensating... you can apply it to any car - Mercedes? small penis car. Corvette? Small penis. F-350? Small penis... But hey, I'd be insecure if I drove a Corolla too.
The tendency for men with small penises to drive red sports cars to overcompensate for their lack of manhood, when all this does is attract negative attention, especially from girls, who immediately think: Red Car Small Penis!