Whether or not you will need a four wheel drive in Nicaragua depends on where you will be driving and what time of year you will be there.
 
There are a lot of good quality highways connecting the main cities in Nicaragua. These roads are like rural highways in the US.  There are several new highways that were just constructed in recent years [2010 - 2014].
 
If you are going to stay in the main cities like Managua, Leon, Granada, or Masaya, then you are probably ok in just a regular car.  Although, it is almost impossible to avoid dirt roads in Nicaragua.  They are often not graded or kept up, so they can have high ridges and deep dips, even in the dry season.  However, the road situation is improving every day.  If you are thinking to venture off the beaten path, then you will need a higher car.  If you will be there during the rainy season [May - November] then you will need a 4x4.
 
This is a picture of the roads in El Transito, Nicaragua during the rainy season.  El Transito is a rural town that connects all the major beaches on the Pacific coast in Nagarote, near Leon.  There are many great surfing beaches in that area.  It can get quite muddy if there are several days of hard rain in a row.

No, you don’t need a four-wheel drive in Nicaragua. In general, you can drive around the whole country on paved roads. The government made a huge investment in the last 5 years on the roads in Nicaragua so you don’t need a four-wheel drive to drive on these roads anymore.

 

If you want to go to touristic places like mountains or volcanoes and some virgin beaches, then that is the only time that you might need a four-wheel drive. But in general, the roads in the whole country are good enough that you don’t need a four-wheel drive. Our streets are better as the government made investments in improving the roads here in Nicaragua. The roads are now more secure and there are more signs and signals, too.  

 

(Road to Leon, Nicaragua, pictured.)