Plot
Notorious real estate magnate and demolition baron Alonzo A. Hawk (Keenan Wynn) is ready to build his newest office building, the 130-story Hawk Plaza in San Francisco. His only obstacle is the 1892 firehouse which is the only building on the site still standing and is inhabited by Mrs. Steinmetz (Helen Hayes), widow of its former owner, Fire Captain Steinmetz, and aunt of mechanic Tennessee Steinmetz. Hawk's numerous attempts at evicting Mrs. Steinmetz have been unsuccessful, while the construction workers are growing impatient with Hawk's alleged indecision, reminding him that the whole thing is costing him $80,000 a day. Therefore, when Hawk's lawyer nephew Willoughby Whitfield (Ken Berry) comes to visit him, Hawk sends him to Mrs. Steinmetz.
Mrs. Steinmetz takes a liking to Willoughby due to his youthful looks and good manners, in contrast to Hawk's henchmen. She introduces him to Herbie the Love Bug, who is staying with her while his owner Jim Douglas is racing in Europe and Tennessee is in Tibet, as well as two other sentient machines: an early 20th-century orchestrion that plays on its own; and Old No. 22, a retired cable car. Her neighbor Nicole (Stefanie Powers), who was taken in by Mrs. Steinmetz after her apartment was demolished by Hawk, punches Willoughby in the face due to him working for Hawk, but tries to make it up to him by offering him a ride in Herbie. Herbie goes berserk after Willoughby insults him twice, eventually taking the two to a car version of a joust tournament, which Herbie wins.
Later at a restaurant on Fisherman's Wharf, Nicole shocks Willboughy by telling him all the horrible things Hawk has done, including building a parking garage on the very same lot where Joe DiMaggio and his brothers learned to play baseball. Willoughby is upset about this and accidentally reveals that Hawk is his uncle; an enraged Nicole hits him with a boiled lobster in response, sending him splashing into the water below. He decides to sever all ties with Hawk and initially tries to go home in disguise, but is convinced by a remorseful Nicole to stay after she hears him criticize his uncle while talking to his mother on the telephone.
Meanwhile, Hawk decides to take it upon himself to drive Mrs. Steinmetz out, starting with stealing Herbie. Hawk is initially successful with his hotwiring skill, but also insults Herbie, who retaliates by causing a series of traffic collisions, and discards Hawk at his own office door. Later, while Herbie takes Mrs. Steinmetz to market, they are chased by Hawk's men; Herbie makes several daring escapes, culminating in traveling through the 1909 landmark Sheraton Palace Hotel and along a suspension cable on the Golden Gate Bridge, with Mrs. Steinmetz oblivious throughout.
Mrs. Steinmetz asks Nicole and Willoughby to pick up some more groceries for her, then suggests to Herbie that he drive them to the beach. Willoughby and Nicole enjoy a romantic moment at the beach and begin to fall in love, but Hawk's chauffeur, spying on Herbie and the duo, bribes a man to park his trailer on the only road out, prompting Herbie to surf through the coastal bay to find an alternate route.
When they return to the firehouse after dark, every item of furniture has been removed by Hawk. Mrs. Steinmetz, Willoughby, Nicole, and Herbie track the theft to Hawk's warehouse, where they break in and recover Mrs. Steinmetz's belongings, loaded into Old No. 22. Hawk's security guards catch them in the act, but Herbie traps them by pushing other items off the warehouse shelves. On the way home, Herbie and Old No. 22 are pursued by Hawk, and Mrs. Steinmetz meets and becomes enamored with an inebriated old-timer named Judson, who resembles her late husband, Captain Steinmetz.
The next morning, Mrs. Steinmetz decides to confront Hawk herself. Accompanied by Willoughby, in spite of Nicole telling him not to let her, Mrs. Steinmetz drives Herbie onto the window-cleaning machine of Hawk's skyscraper to reach his office, where they overhear Hawk on the phone with Loostgarten (Chuck McCann), an independent demolition agent, about a deal to demolish the firehouse. In response, she activates the window cleaning machine to fill the office with soap and water. Herbie drives in and chases Hawk around the office, then outside onto a ledge of the building, until Mrs Steinmetz calms him down.
Disguising his voice to resemble his uncle's, Willoughby calls Loostgarten and misdirects him to demolish Hawk's own house. Late that evening, Loostgarten telephones Hawk to confirm the demolition, waking Hawk from a nightmare of being at Herbie's mercy; Hawk gives confirmation, but realizes too late that he has condemned his own residence, and angrily chases after Loostgarten after a portion of his house is demolished.
Hawk fakes a truce with Mrs. Steinmetz; thinking him to be sincere, Willoughby and Nicole go for dinner, while Mrs. Steinmetz invites Judson to the firehouse for a date of their own. Hawk shows up with bulldozers and frontloaders to crush the firehouse and its inhabitants once and for all, prompting Herbie to go in search of Nicole and Willoughby. In the absence of Herbie, the only means of defense is an antique fire hose, which Judson uses against Hawk's men until it bursts.
Finding Nicole and Willoughby, Herbie rounds up an army of other sentient Volkswagen Beetles from around the city (including a wrecked one from a junkyard), and they chase after Hawk and his men, taking advantage of Hawk's irrational fear of Herbie and causing his men to flee. Hawk, after nearly getting knocked down by a police car, is arrested after telling his bizarre tale of an army of Volkswagen Beetles chasing him. Nicole and Willoughby get married, and ride Herbie through an arch formed by his Volkswagen Beetle friends.
