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    Set in the 1910s, the story opens with a Grand Prix race, in which one of the cars swerves to avoid a dog, loses control, crashes, and catches fire, bringing its racing career to an end. The car ends up in an old garage, where two children, Jeremy and Jemima Potts, have grown fond of it, but are told by a frequent customer, a junkman, that he and his business intends to buy the car from the garage owner Mr. Coggins, for scrap; to crush it into one solid lump, then melt it down to a liquid and have the metal to sell. The two children, who live with their widowed father Caractacus Potts, an eccentric inventor and his equally peculiar parent, implore him to buy the car before the junkman does, but he is unable to, not having the money. While skipping school, they meet Truly Scrumptious, a beautiful upper-class woman with her own motorcar, who brings them home to report their truancy to their father. Truly shows interest in Caractacus' odd inventions, but he is affronted by her attempts to tell him that his children should be in school.

    One day, while going over his bizarre inventions, many of which seem to be similar in function and form to modern appliances, such as vacuum cleaners and televisions, Caractacus discovers that one of the sweets he has invented can be played like a flute. He tries to sell the "Toot Sweet" to Truly's father Lord Scrumptious, a major confection manufacturer, but when the factory is overrun by dogs responding to the whistle, he is thrown out. Then he takes his automatic hair-cutting machine to a carnival to raise money, but it goes haywire. He eludes the wrath from his first (and only) customer named Cyril by joining a song-and-dance act, stealing the show and earning enough tips to pay for the car. Potts rebuilds the car, which he nicknames Chitty Chitty Bang Bang for the noises its engine makes, and he and the children, accompanied by Truly, go for a picnic on the beach, where Truly becomes very fond of the Potts family and vice versa.