TORONTO, AUG. 19 -- At a splashy party Tuesday on the manicured grounds of a surburban Toronto estate, the Soviet Union wheeled out models of its low-budget compact Lada car that were recently upgraded to meet North American standards.

Delivery of the automobiles had been delayed for nearly a year as engineers worked out design flaws. The Canadian distributor said he hopes to carve a niche at the low end of the Canadian market.

Lada officials in Moscow told Automotive News, a Detroit trade publication, that they hope to be selling the cars in the United States in a few years.

Canadian automotive writers who drove the cars in Moscow last year said the revised version was much improved. "The ones we drove in Russia were really bad," said Jim Kenzie, automotive columnist for the Toronto Star. He said a spring was sticking up from the seat of one and a mirror fell off another as the reporters tested it.

There were no such mishaps Tuesday as Canadian used car dealers and reporters drove the little, 4-cylinder auto around the 163-acre estate of Erhard Weitler, the Canadian distributor. A bagpipe band played and Danish caterers served up heaping portions of lobster, caviar and roast suckling pig.

At a fashion show after lunch, models showed off fall Toronto fashions, and lingerie -- "just to sex the thing up a little bit," explained public relations man Jim Muir. Canadian agricultural ministers and a Soviet trade commissioner made speeches about the new era in Soviet-Canadian trade that they said this event heralded.

When Soviet Foreign Minster Eduard Shevardnadze renewed a five-year agreement to buy grain from Canadian farmers during a visit to Ottawa last November, he made it clear that one condition was that Canadian officials try to reverse the large imbalance in trade. Canadian exports to the Soviet Union amount to about $1.2 billion each year, mostly grain sales. Canadian purchases of Soviet goods, however, come to just $22 million a year.

Weitler, a German emigre who said he has dealt with the Soviets for years in the oil business, was sanguine about Lada sales. The natural market for the car, which has a list price of $4,500, is in the countryside and in regions of Canada with high unemployment, he said.

"It's never been a beautiful car," he said, adding that he did not expect it to be popular with persons who regard an automobile as a status symbol. He said his target is to sell about 3,000 this year and increase it by an additional 1,000 annually.

Weitler seemed especially worried about a flare-up in East-West tensions that could cause Canadians to reject the Soviets and their cars as they did after a Korean Air Lines passenger plane was shot down as it flew over Soviet air space in September, 1983.

The first Canadian company to distribute Soviet cars went bankrupt after being hit by what Muir described as "the double whammy" of the airline incident and the competition of Korea's low-cost Hyundai. Weitler said the best sales year was 1982, when Canadians bought 14,000 Ladas.

After the airline incident, sales plummeted as the Ladas became convenient targets for Canadians wishing to demonstrate their outrage. Some Canadian service stations refused to sell gasoline to Lada owners. Icah N. Bryant, who had Ladas on his used car lot in Kingston, Ontario, said he received death threats from persons demanding that he move them off his lot.

The resistance was so strong that about 1,000 Ladas sat rusting for many months on the open dock at Halifax where they had been unloaded. When Weitler took over the company, he said, one of his concerns was to keep those cars out of the Canadian market. He feared that if any ended up on dealer lots the public image in Canada of Soviet cars might forever be ruined. Weitler smiled contentedly when he explained how he was able to arrange for half of them to be shipped off to Panama and the other half to Cuba.

One of the more enthusiastic Lada dealers at the party Tuesday was Fred Veselovsky, who left his home in Czechoslovakia in 1968 after Soviet tanks rolled into Prague. He said he saw no contradiction. "I don't consider the car to have anything to do with politics," he said. "This is good, cheap transportation for the lowest guy."

He reflected for a moment, adding that he thought the automobile might be too inexpensive. He said buyers of the old Ladas he carried did not properly maintain them. "They don't care," he said. "They think like they're buying cheap shoes."