Ford Motor Co. imports no cars or trucks from Japan, but does import auto parts from there. Ford's business with Japan was described incorrectly in a Business section article Tuesday.

General Motors Corp. yesterday picked the tiny town of Spring Hill, Tenn., for its showdown with Japanese auto makers over domination of the small-car market.

GM announced that it has chosen the village 30 miles from Nashville for the most sought-after industrial project ever -- the $3.5 billion complex to manufacture the Saturn, the subcompact vehicle for General Motors' $5 billion bid to revolutionize small-car production in the United States.

In what it says will be its final attempt to build and sell small cars on its own in the United States, GM hopes to have the first of a planned annual production 500,000 subcompact cars rolling out of Spring Hill by 1990.

General Motors' Saturn Corp. will be headquartered in Troy, Mich., and have engineering operations in Madison Heights, Mich. -- both northern suburbs of Detroit.

GM officials contend, and many auto industry analysts agree, that the success or failure of Saturn could determine the future of small-car production in the United States. The company is counting on new technology and an innovative labor agreement to overcome a $2,000-per-car production-cost advantage that Japansese manufacturers have over their American competitors.

GM, Ford Motor Co. and Chysler Corp. already are importing hundreds of thousands of Japanese cars in what they all claim is an interim measure to obtain quality small cars at low cost.

Ford and Chrysler also have Saturn-like plans to build small cars on their own in the United States. If GM finds that it can't build small cars at competitive prices in this country, the likelihood is that its domestic rivals won't even try, analysts say.

GM's announcement yesterday ends seven months of media guessing about and intense regional bidding for the location of the high-technology facility that is expected to produce nearly 30,000 auto-related jobs.

GM said that its decision is tentative, pending the outcome of discussions with Tennessee state, local and utility officials.

Those talks will be over "such items as access roads, education and training for employes, environmental matters and the cost of taxes, water, electricity, natural gas and sewers," said Saturn Corp. President William E. Hoglund.

"Obviously, we're now looking forward to finalizing our remaining requirements and getting on with the job," Hoglund said yesterday in Detroit. "But one of our highest priorities is to proceed in such a way that we preserve the quality of life and natural beauty that attracted us in the first place."

Hoglund did not elaborate on why GM chose Spring Hill -- a town of 1,100 people. The community was one of 1,000 sites considered by GM since December of 1983, when the company first publicly disclosed the Saturn Project.

GM announced the creation of the autonomous subsidiary Saturn Corp. on Jan. 8. Until then, the parent company had been looking at about 20 sites to set up its complex, but the announcement released a deluge of applications -- "enough to fill 20 large filing cabinets," Hoglund said yesterday. Individual states and communities spent as much as $200,000 trying to land the prize and half the nation's governors trekked to GM's Detroit headquarters to plead their case. Congressional delegations and representatives of state legislatures also joined in the lobbying.

Critics accused the auto maker of running a ruse designed to make communities outdo one another in offering freebies for the complex. But GM contended all along that it was not interested in one-time incentives, that the Saturn project was too important for one-time breaks.

David Healy, auto industry analyst with New York-based Drexel Burnham Lambert, said the final decision was "a matter of costs. The South is attracting a lot of non-union auto suppliers whose costs are low. A lot of things that are going to go into Saturn will be bought by GM, not built by GM." Because of low supplier costs and an excellent and relatively inexpensive transportation network, it really doesn't matter that most of the 6,000 production workers at Saturn will belong to the United Auto Workers union, Healy said.