When you twist the throttle, a "striker" cyclically strikes a "resonator cone", making a simulated two-stroke engine sound.
The toy was made by the Ideal Toy Corporation who went on to introduce the Rubik's Cube (considered to be the world's best selling toy) and did very well off of that toy craze in the early 1980's. However, profits began to decline and, in 1982, the founder's grandson sold the company to CBS Toys for $58 million. CBS sold it to Viewmaster in 1987, then Viewmaster was bought by Tyco two years later, which merged with Mattel in 1997. End of the line.