Brain-inspired Hyperdimensional (HD) computing is a new machine learning approach that leverages simple and highly parallelizable operations. Unfortunately, none of the published HD computing algorithms to date have been able to accurately classify more complex image datasets, such as CIFAR100. In this work, we propose HDnn-PIM, that implements both feature extraction and HD-based classification for complex images by using processing-in-memory. We compare HDnn-PIM with HD-only and CNN implementations for various image datasets. HDnn-PIM achieves 52.4% higher accuracy as compared to pure HD computing. It also gains 1.2% accuracy improvement over state-of-the-art CNNs, but with 3.63x smaller memory footprint and 1.53x less MAC operations. Furthermore, HDnn-PIM is 3.6x-223x faster than RTX 3090 GPU, and 3.7x more energy efficient than state-of-the-art FloatPIM.