From the United Artists Pressbook
Crackpot inventor Caractacus Potts (Dick Van Dyke) buys a dilapidated car called Chitty Chitty Bang Bang and drives to the seashore with his two children Jeremy (Adrian Hall), Jennifer [Jemima] (Heather Ripley)--and Truly Scrumptious (Sally Ann Howes), the beautiful daughter of Lord Scrumptious (James Robertson Justice).
On the beach, Potts tells a pirate story, weaving into it a tugboat that appears on the horizon. It is not a tugboat, he says, but the yacht of evil Baron Bomburst (Gerte Frobe), who has come to steal the car. Mistaking the children's eccentric Grandpa (Lionel Jeffries) for Potts, the Baron kidnaps him.
Potts, Truly and the children give chase in the amazing car, which turns out to be a plane and a hydrofoil as well. When they arrive in Vulgaria they learn that The Baroness (Anna Quayle) hates children and has ordered them all killed. The village Toymaker (Benny Hill) hides Jeremy and Jennifer [Jemima] but the evil Child Catcher (Robert Helpmann) captures the children and their car, hauling them off to the castle. Potts and Truly smuggle themselves in to the castle as life-size puppets and with the fugitive village children, launch a surprise attack. Jeremy, Jennifer [Jemima] and Grandpa are freed, and the car is recovered and the Baroness is foiled.
It has, of course, been one of Potts' daydreaming tales for the children. When it is over, he and Truly realize that they are in love and decide[d] to marry. Not as scatterbrained as he seems, Potts tells the children it is fine to have dreams, adding, "Just because you dream something up doesn't mean it'll come true." With that, Chitty Chitty Bang Bang slowly rises into the sky and they fly off over the hills and out of the movie...