The future of the domestic automobile industry very well may rest on sand.

That common substance contains key ingredients for some uncommon materials that are essential to producing a revolutionary type of engine -- the ceramic gas turbine.

The country that first perfects the engine could wind up dominating international auto production, according to domestic and foreign car manufacturers. A reliable ceramic engine would be a quantum leap forward in efforts to improve fuel efficiency without sacrificing performance or safety in automobiles, automobile executives say.

Ceramic engines allow the compression and expansion of gases at extremely high temperatures without loss of heat or engine damage. An engine that holds its heat without harming itself or other components operates more efficiently.

Turbines have been around for years. Chrysler Corp. had an experimental gas-turbine car in 1963. But it never was offered commercially because Chrysler could not find a cost-efficient way to handle the tremendous heat -- as much as 2,500 degrees Fahrenheit -- generated by the engine.

Improvements in ceramic materials promise to make the gas turbine practical. Indeed, new kinds of ceramics are responsible for changes in products ranging from cars to electronics to false teeth. These new ceramics are a far cry from the flower pots, bathroom tiles and crockery commonly associated with the word. These new materials are made up of silicon and other traditional ceramic ingredients combined with carbide polymers, alumina and other materials.

The resulting compounds retain the ability to withstand heat, but are less brittle and more wear-resistent.

The effect on the auto industry is expected to be profound.

Unlike traditional piston engines, turbines burn fuel at a steady rate and derive power by directing expanding gases against a fan-like device. The gases turn the fan, which turns a shaft connected to a gearbox. The steady burn and high temperature make for greater efficiency.

"There is no question that an automotive ceramic gas-turbine engine can offer substantial benefits to the automotive industry and to the country," said John A. Boppart, senior vice president of Garrett Turbine Engine Co. in Phoenix.

But the United States is "not, in fact, doing a very good job of keeping up with the Japanese in ceramics," Boppart said in recent testimony before the House subcommittee on transportation, aviation and materials.

Garrett is working with Ford Motor Co. to develop an advanced gas-turbine that will have "hot parts" -- turbine rotor and blades, combustor assembly, ducts -- made of ceramics. General Motors Corp. has a similar effort under way with its Allison Gas Turbine Division.

The GM and Ford projects have received $116 million, mostly in federal money, since 1980. The companies are asking the government to ante up another $100 milion over the next four years -- a request that brought them to Capitol Hill last month and raised the ire of some lawmakers who said that the two companies are rich enough to fund their own research.

But GM and Ford defend their funding requests.

"GM has been in gas-turbine development since 1952," said Harold E. Helms, chief project engineer for Allison Gas Turbine. "I can assure you that that money did not come from the federal government."

Ford last week spent more of its own money, $10 million, to acquire an 11 percent interest in Ceradyne Inc., a company based in California that specializes in commercial applications of ceramics technology. Much of Ceradyne's work will involve developing automotive products, Ford President Harold A. Poling said.

But why call on the government?

For all of its benefits, ceramics technology also carries a bag of problems, domestic auto makers say.

Brittleness is one. Ceramics tend to break or crack under stress, such as that caused by a vehicle crash. Another is bonding ceramics to metals.

The research necessary to solve those problems is costly -- too costly for companies that are under market pressure to come up with new products immediately, according to Boppart, Helms and others.

By comparison, Japan is progressing rapidly in ceramics development, largely because auto makers, the government and universities are working together to make Japan the ceramics leader, U.S. auto makers say.

"What we've found in the last four years is that, because of their national commitment, the Japanese can produce more" in the field of ceramics, said Serge Gratch, Ford's director of vehicle, powertrain and component research. "The Japanese simply are able to invest more in ceramics because of their national commitment."

Japan is taking the lead in ceramics.

For example, Nissan Motor Co. Ltd. is producing 500 cars a month -- its 300 ZX sports models -- with have ceramic-component turbochargers. These devices increase pressure on the air-fuel mixture in engine combustion chambers.

Nissan's ceramic-turbo models currently are sold only in Japan. But if the technology proves effective -- and durable -- there is little doubt that Nissan will export its ceramic turbos to the United States, giving the company a big advantage over its U.S. rivals in the high-priced end of the domestic car market.

The domestic electronics industry also has a stake in the ceramics wars.

The growth of the electronics industry and the breadth of new applications for advanced ceramics is projected to boost demand for ceramics material by 50 percent -- from $3 billion in 1984 to more than $4.5 billion in 1989.

Currently, half of the world's sales of advanced ceramic materials is to the electronics industry. Kyocera in Japan is the world leader in ceramic packaging of computer chips, with nearly a 70 percent market share.

"We look at what they're doing very carefully," a Westinghouse Electric Corp. research director said. "Because they're the leaders."

While citing the role of government in Japan's progress in ceramics, U.S. industrialists also are willing to concede that the Japanese are quicker to develop prototypes and to test ceramic materials in the marketplace.

The Japanese also stress the process technologies that go into ceramic manufacture, and therefore are able to explore economies of manufacturing scale earlier than U.S. companies, domestic industrialists say.

Japan's Kyocera, for example, has made tremendous strides in false-teeth technology by developing a crystal sapphire implant that's more durable than porcelain. People wearing the advanced ceramic dentures can chew harder with less risk of damaging the implant.

But U.S. companies are well-positioned in the fast-growing ceramic-composite portion of the new-materials market. "Metal matrix" composites in particular have captured the attention and the investments of leading aerospace companies and the Pentagon.

"There's a lot going on in that area in the Defense Department," said a former assistant secretary of Defense for technology, Robert Cooper, who pointed out that the Defense Advanced Projects Agency has several significant new-materials projects under way.

The Pentagon believes that metal-matrix composites ultimately can lead to a tougher but lighter generation of materials for airplanes, tanks and troop carriers.

Essentially, a metal matrix consists of a metal -- such as aluminum -- with strands of ceramic fibers running through in the form of a skeletal mesh. This fiber network can lend strength and heat resistance to the metal in ways that alloys or other composite material can't. For example, ceramic-fiber-aided aluminum performs as well as the more expensive titanium in engines and in other applications.

The challenge is to find an inexpensive way of blending the fibers and metal. No one has announced commercial success so far. Defense is working on new ways of "wetting" the fibers to the metal.

"They don't bond if the fibers don't wet," Cooper said.

In addition to military applications, metal-matrix ceramic composites also may have civilian uses, such as for tennis racket frames (much as there are carbon-fiber-based tennis racket frames). Tough, but lightweight, bicycles are a similar opportunity. Also, ceramic fiber metal-matrix materials are expected to find their way into the automobile industry.

E. I. du Pont de Nemours & Co. and other U.S. companies are competing with Japanese companies such as Kyocera and Nippon Carbon for the multimillion-dollar market. Moreover, the strength of the domestic aerospace and automobile industries initially should assure a ready market for U.S. companies.

Indeed, although painfully aware of Japanese competition, U.S. chemical companies are diversifying into ceramics. Du Pont, a $36 billion-a-year chemical giant, has publicly declared its ambition to be a major ceramics supplier. Similarly, Dow Chemical Co. and Koppers Co. Inc. have equity investments in ceramics companies.

Drawing on its extensive expertise in engineering plastics, General Electric Co. also invested in the potential of ceramics by acquiring two plants from 3M Co. and setting up GE Ceramics in 1983.

But to ensure that the advanced-ceramics industry has a voice in Washington, U.S. companies formed the United States Advanced Ceramics Association last October. The group seeks a Standard Industrial Classification code for advanced ceramics, a Department of Commerce technical advisory committee and intellectual-property protection for ceramics process techniques developed in this country.