First - the official synopsis here and on Wiki is not what I remember of the movie. For example, I don't recall that the main character was looking for a particular girl in California, nor do I remember him having a girlfriend back home. But the other two reviewers before me describe what I remember. Here's what I can add:
The main character arrives in California in search of a better life and shortly after leaving the airport, he gets into an accident with a very attractive and glamorous California girl, the kind that inspired the song. The girl is distraught over the body damage -- maybe it wasn't her car -- and because the guy is a mechanic, he offers to come over to her place to fix it over the course of the days that followed. From that chance encounter, a relationship ensues. I don't recall the various other subplots.
Near the end of the movie, he wakes up and it is revealed to viewers that it was all his dream. He gets out of bed to catch his flight and arrives in California, but this time it's raining and dreary out and nothing is as glamorous as they were in his dream. The movie ends right after he crosses paths with a less glamorous but otherwise attractive and more likable girl he had met in his dream version of his California trip. He says hello, and the movie ends, leaving the rest to everyone's imagination.
Pretty silly plot, I gave it a 6, but I'd love to catch it again for the nostalgia.