The Americam taxicab business is due for a huge shakeup with the nearly certain advent of retired General Motors Corp. president Edward N. Coles as chairman and chief executive officier of Checker Motors Corp.

A prime probablility in the near future is a "stretched, special made-in-American taxi version of the Volkswagen Rabbit. Cole had had recent discussions with Volkswagen Manufacturing Corp. about buying the tiny front-wheel-drive cars.

The Rabbit weighs less than 1,900 pounds, and some of them will be built at VW's New Stanton, Pa., assembly plant beginning early next year. James McLernon, former general manager of Chevrolet's 25 U.S. manufacturing subsidiary. He is understood to be close to Cole.

Cole will become chairman and chied executive of Checker if her and New Cadillac dealer Victor Potamkin exercise options to buy 50 per cent interest in the family owned firm.

THe porposed stock sale by heirs of Checker founder Morris has been disclosed in a filing with the securities and Exchange Commission.

Documents filed in Washington with the SEC also disclosed plans to revamp the Checker automobile and expand the 55-year-old company's business operations.

According to the report filed with the SEC, the new owners plan to up-grade the fuel efficiently and reduce the weight of the Checker car. They also may incorporate a diesel engine into the car design.

The filing also raises the possibility of Checker's expansion into other areas of manufacturing. Last year, the company won a contract to produce car frames for GM, a deal which has created 300 new jobs.

According to the SEC filing, Cole, 67, and Potamkin, owner of the world's largest Cadillac franchise, each paid $100,000 for their options, and together would pay and additional $5.8 million if the options are execrised by the March 4 deadline.

Checker president David Markin, son of the founder, confirmed this and that his sister, Shirley Buchman, and the estate of his late sister, Josephine Lazarus, are prepared to sell their 50 per cent interest in Checker Taxi Co., the holding company of Checker Motors.

Checker Motors, traded on the Midwesr Stock Exchange, currently is selling for 22 1/2 per share.

Markin and his younger sister, Marilyn Feldman of Chicago, own the other 50 per cent interest in the company, and plan to retain their ownership.

Checker has annual sales of roughly $85 million, employs approximately 5,000 people and has its headquarters in Kalamazoo, Mich.

Approximately 40 per cent of the company's income comes from annual sales of 5,000 of the large, dowdy Checker cabs or the Marathon, the "civilian version sold for private use.

The vehicle sells for $6,000 to $8,000, and Cole estimates the total U.S. market for new taxis in the neighborhood of $50,000 to 100,000 a year,

He envisions using the front end of the four-door Rabbit, inserting roughly a foot of sheet metal "stretch" and attaching the longer rear end of the two-door Rabbit,

The front-wheel-drive system gives a low, flat floor and a jump seat could be inserted easily.

The current checker vechiles are in large part Chevrolets, with the engine, suspension, transmission and differential all built by General Motors. Body and chassis assembly is done by Checker is Kalamazoo.

The remaining 60 per cent of Checker revenue is from a taxicob operating subsidiary, Checker has the largest cab fleets in Chicago, Pittsburgh, and Minneapolis. Cole's carrer in the Auto industry has been a hotly controvesial one. He played a major - probably pivotal - role in the catalytic converter, the ill-fated Gm Wankel engine project, and the Chevrolet Corvair and its unique air-cooled aluminum rear engine. He recently allowed he probably began the fad or placing tailfins on cars because he put them on the 1948 Cadillac. He also was the industry's leading advocate of antipollution catalytic converters and air bag passenger restraint systems.

After a 44-year career at GM, the last 7 as president, he retired in 1974 and currently is chairman of International Huskie, Inc., an air freight business he organized.

A man of no small ego, Cole had free-handed fiscal habits an adventuresome spirit engineering projects which sometimes spread red ink luxurously across GM's accounting records. That created a bumper crop of personal antagonists at GM, where concern for the bottom line is almost a religion.

During World War II, Cole ran GM's Cleveland military tank plant, once personally driving an Army tank through the heart of Pittsburgh enroute to the Aberden, Md., proving grounds.