Just to clarify, not all children respond to material/physical rewards, sometimes acquiring the behavior, in this case being potty trained, IS the reward : ) You're right, little race cars or other toys lose their worth when a child has many others...there's no incentive. Possibly he would do better with a sticker chart and earning a trip to Chuck E Cheese or another place he finds fun. or maybe he'll just be content in being trained, period.
Use cloth training underwear, not pull-ups, so your son feels the wetness and starts to associate the feeling he gets right before his pants are wet. If you can have him go bottomless at home and keep his potty handy he may become more comfortable in going on his own. Also, don't wait for him to tell you he needs to go, take him every 30 minutes or so until you find his pattern of needing to go then stick to that and take him at those times. Allow him to see you using the toilet so he learns that everyone does it. You mentioned that he won't poop in his undies, if he's not doing it on the potty or toilet make sure each time you have him dump it in the toilet because "that's where poop goes."
This site proved invaluable when training my little guy:
http://www.rogerknapp.com/medical/pottytrainingrefusals.htm
It takes an average of 3-6 months to potty train a child, so stick with it consistently, have an attitude of expecting him to do it, and he should get there in a short time.