Make smaller vessel to carry small car (8)
I believe the answer is:
diminish
'make smaller' is the definition.
(diminishing is a kind of making smaller)
'vessel to carry small car' is the wordplay.
'vessel' becomes 'dish'.
'to carry' indicates putting letters inside.
'small car' becomes 'mini' (I've seen this before).
'dish' going around 'mini' is 'DIMINISH'.
(Other definitions for diminish that I've seen before include "Grow smaller, shrink" , "Get smaller" , "Make or become smaller" , "Drop" , "Decrease, lessen" .)