Jim Douglas has pulled his famouse racing car off the track - where is he now? teaching a driving school- with major help from Herbie! Herbie and Jim Get involved in stopping a bank robbery and rescuing the beautiful teller Susan from her hostage situation - as gratitude she signs her daughter up for driving lessons. Jim falls head over heals for Susan only to find out she is temporarily engaged to a Mr. Randy Bigelow.

Susan leaves Bigelow at the alter only to land Jim into a hostile situation as Randy Bigelow decides Jim needs to be eliminated from the picture - his first idea is to get the bank to loan Jim money to save his driving school- his plan: force him out of buisness.

Randy bigelow - still persistent to stop Jim and Susans wedding hires a private detective to scoop up somthing awful on Jim that will change Susans mind! When it fails he places a stink bomb inside Herbie - in hopes it will ruin the ceremony.

Jim and Susan decide they need a bigger family car.To test drive one they need collateral - Herbie is it, they leave him at the car lot while they take the new one for a spin. Herbie has a temper tantrum and destroys all the cars in the lot.Jim unable to pay for the damages, reluctantly has to leave Herbie inpounded until he can raise the cash. In the meantime thieves try to steal Herbie.