A Volkswagen with a brain becomes a championship racecar.

Jim Douglas, a racing driver with consistently bad luck, shares a bachelor flat in a turn-of-the-century San Francisco firehouse with Tennessee Steinmetz, a guru-indoctrinated scrap metal sculptor. One day Jim is drawn into a posh automobile showroom by the attractive presence of Carole Bennett, the secretary to the showroom's stuffy manager, racing driver Peter Thorndyke. After objecting to the abusive treatment Thorndyke shows to a little white Volkswagen, Jim leaves the establishment and is followed by the grateful little car. Once a down-payment has been made on the Volkswagen, which Tennessee nicknames Herbie, Jim enters it in a race and drives to an easy win. As victory follows victory, and romance blossoms between Jim and Carole, Jim attributes his success to his own skills, but Tennessee realizes that it is Herbie who deserves the credit. Determined to get back the magical car, Thorndyke dupes Tennessee in an Irish coffee drinking bout and succeeds in getting Herbie drunk. As a result, Jim loses his next race and decides to replace Herbie with a larger model. Herbie's true worth finally becomes apparent to Jim, however; with Carole as his co-driver he competes in a race against Thorndyke. Using every trick he knows, Thorndyke almost causes Herbie to crash, but he ultimately fails when the little car literally splits in two, thus placing first and third. Their happiness complete, Jim and Carole set off on a honeymoon--with Herbie driving them to a destination of his own choosing.