I'm not a car modeler but I have had to buff out the paint job on a few sci-fi models (like my flyng sub).
The best product for this, in my experience, is an automotive polishing compound. I use Turtle Wax White Polishing Compound (it's a couple of years old so I'm not sure of it's current availability). It comes in a container much like car wax but it's NOT wax and contains no waxes, solvents or silicones.
It's a creamy, water soluble compound with a consistency not unlike lard. Rub it in with a damp, soft cloth (this assumes you've already wet-sanded out the "lumps"). Give the paint job a final buff with a soft cloth. It works well for my purposes.