Cathryn,
You'll have to open it up and do a little troubleshooting.
1.) It may just be an antenna problem. The antenna is this small plate labeled "2" in the exploded parts diagram below (which is accessible through lionelsupport.com if you need to see the whole thing). The plate should be glued to the roof of the car, or one of its side walls, and should have a wire connecting from it to the motherboard, which is part "16" on the diagram. This wire is not shown here. So you'll have to find it and check to see if the wire is connected between the plate and the motherboard.
2.) On the other hand it could be a radio problem. This board is the radio board (R2LC), #22 on the diagram above:
You may need to replace it. Unfortunately, its' no longer available from Lionel parts, but there are many, many of them out there because they have been the most common board across all of Lionel's production in the past.
You should be able to find one, new or used, and its descendent, the R4LC, should also work and is available brand new from Electric Railroad (ERR).
If you do the replacement be careful; the new one must plug in precisely in the same way the old comes out. Do not accidentally shift the connectors, for instance by being off by one row of pins (which is easy to do), because that will kill the new one.
Mike