Generally, just remove the old version and resintall the new version, however, if user changed the theme files, you can’t update the theme smoothly, only if you move your changed codes to the new version manually, that’s why I have mentioned don’t change the theme files in the documentation and suggest user to create their own child theme or add custom CSS, JS into OldCar options > Custom code if they want to customize something.
If you haven’t changed any files, just make some changes in theme options, you can install the new version directly, all your changes are saved in database, they won’t lost.
Anyway, you should backup the old version before you remove it.
Thanks!