Becca-now that I remember. When my kids were growing up in the 1970s-1980s. The first child to see a Volkswagon Beetle would say "Punch buggie!" and punch another one.
I wasn't consistent about how I handled it. Sometimes, I tolerated it. Sometimes I did it with them myself. And sometimes-when the punching got out of control-I'd tell them to stop.
There's not too many VW Beetles left anymore. So I guess eventually this custom will fade away. But other kid's pinching exchange will replace it, guaranteed.