FREMONT, CALIF. -- Toyota Motor Corp. taught General Motors Corp. how to build high-quality small cars here. Now, GM has to learn how to sell them.

That, so far, is the lesson of New United Motor Manufacturing Inc., or NUMMI, the first joint-venture company involving U.S. and Japanese auto makers building cars on American soil.

By all estimates, the product of that GM-Toyota venture, the Nova subcompact, is a world-class car. A derivative of the reputable Toyota Corolla, the Nova has the best overall quality rating in the GM empire.

But the Nova isn't selling well, and a lot of people here and in Detroit are worried.

Fremont's consternation is understandable. The Nova is being built here in a former Oldsmobile plant closed by GM in 1982 -- an action precipitated by sloppy quality, hostile labor-management relations, rising production costs and falling sales.

Five thousand people lost their jobs in that shutdown.

It was with born-again fervor that many of those same workers embraced the idea of a GM-Toyota venture, which the corporations tentatively agreed to on Feb. 17, 1983. This would be a second chance, an opportunity to prove to the world that a multiethnic American work force could produce top-notch automobiles.

It seemed a nifty deal: Toyota would teach GM's people Japanese management and production techniques, using union-represented labor. GM would get a competitive small car to help broaden its then-thin line of subcompact autos. Toyota would gain valuable experience manufacturing cars in the United States, thus putting it in a league with other Japanese auto makers, who are expected to have the capacity to build 2.5 million cars and trucks in America by 1992.

Everyone made concessions to get the venture going. GM, often domineering in intercorporate relationships, granted Toyota virtual autonomy in running NUMMI. Toyota, while extremely reluctant to accept a United Auto Workers local tainted by strikes, strife and product faults, gave the union a strong job-security clause and a greater say in factory operations. UAW Local 2244, accustomed to doing things by the book in the old GM plant, scrapped scores of inefficient job classifications and gave the NUMMI managers wide latitude in assigning and planning work.

"We even have some production people who come in here on weekends, on their own, to work on projects," said Mark Hogan, comptroller and general manager of NUMMI.

"This is not the same plant it was before" under GM, said George Nano, chairman of the Local 2244 bargaining committee. "I know we're doing a good job. I know we're turning out a good product," which is why the Nova's subpar sales are frustrating, Nano said.

The NUMMI plant can produce 200,000 Nova cars annually, in addition to 50,000 Toyota Corolla FX subcompacts, which are also selling poorly.

The Nova went on sale June 10, 1985, in 26 states. Some 16,323 Novas were sold that year.

NUMMI sold 170,661 Novas in 1986, the car's first full year of production and nationwide distribution. According to J.D. Power and Associates of California, an auto marketing research firm, the car was well received. There were very few customer complaints about quality, said Power analyst Christopher Cedergren.

But the Nova hit the skids in 1987, falling to 140,664 units sold. GM's Chevrolet Division expects to sell 110,000 Novas in 1988, according to Robert D. Burger, the division's general manager.

That precipitous drop has created lots of head-scratching in this combination bedroom/industrial community, some 40 miles south of San Francisco. The local media have been interviewing nervous NUMMI employees, and raising the specter of another long-term shut down of the Fremont plant. Some people here and in Detroit have begun to ask the unthinkable: Is the much-heralded GM-Toyota venture in danger of crashing?

"No," said Burger, who visited here earlier this month to meet with NUMMI officials and workers on a nerve-calming mission. "Nothing's gone wrong," Burger said. "The Nova is doing better than a lot of people have given it credit for. But, certainly, it's not selling in numbers as high as those we initially set."

Local 2244 President Tony DeJesus, whose union represents 2,100 production workers here, said he is not terribly worried about layoffs because the NUMMI contract -- which expires in June -- says the company "will not lay off employees unless compelled to do so by severe economic conditions that threaten the long-term financial viability of the company."

NUMMI has had a hiring freeze for the past 18 months, but the company so far has been able to hold on to most of its original 2,500 production and administrative employees, NUMMI officials said.

Kan Higashi, NUMMI president and chief executive, said he intends to continue honoring the company's commitment to the union. "We are a very young company, with many things to do. Many people {who otherwise might have been laid off} are being trained for new jobs within the plant," Higashi said.

New jobs? Both Burger and Higashi declined to answer that question, citing what they said were Federal Trade Commission antitrust rules preventing GM and Toyota from discussing future products under consideration by their respective joint-venture teams.

Sources familiar with Chevrolet plans said, though, that GM will discontinue production of the Nova this spring. The car will be replaced with a four-notchback -- a passenger car with a traditional trunk -- called the Prizm, sources said. A four-door Prizm hatchback also will join the Chevy lineup at NUMMI, sources said.

Both Prizm models, based on updated versions of Toyota's Sprinter series now on sale in Japan, will be equipped with standard 1.6-liter, four-cylinder, 16-valve engines, sources said. Toyota reportedly will discontinue production of the hatchback FX Corolla at NUMMI and replace that car with a four-door Corolla notchback.

In the meantime, Chevrolet on Jan. 28 launched a $1,200-rebate program to deplete the gargantuan 200-day supply of the cars. Current import-car owners buying a Nova are eligible for the rebate. Owners of domestic cars buying a Nova, or first-time buyers purchasing that model, are eligible for a $600 rebate.

The rebate program, which ends Feb. 29, "has more than doubled the sales" of Novas to 400-plus units a day, Burger said. But when the rebates end, Nova sales could head south once again, Burger said.

Even with continued rebates, it is unlikely that the four-cylinder, front-wheel-drive Nova will top 110,000 sales this year, said Cedergren of Power and Associates. "Chevrolet is trying to do everything it can to produce excitement for the car, but so far it's had little luck," Cedergren said.

The problem is that the Nova essentially is a conservatively styled, four-door hatchback surrounded by a sea of competitors, including many cars in Chevrolet showrooms, Cedergren said.

A look at the 1988 list of $7,000 to $15,000 cars, the pricing segment in which the Nova competes, indicates the subcompact's problems. There are the Chevrolet Beretta and Cavalier, Corsica and Celebrity at the higher end of that scale. And there are the Chevrolet Spectrum, Turbo Spectrum, Spectrum Express, Sprint, Sprint Metro and Turbo Sprint at the middle and lower parts of the Nova's competitive price range.

"We have many dealers who'd much prefer to sell a higher-priced Beretta than a lower priced Nova," said one GM official, who requested anonymity.

Some potential Nova buyers came to the same conclusion. Listen to Suzanne Crowell, a District of Columbia resident who tried to shop for a Nova at a Chevrolet dealership in Rockville last year:

"The dealer didn't seem to care whether I bought the Nova or not," she said. "I was looking for a Nova with a manual transmission, but the dealer said he didn't have one that I could drive, and he didn't seem too enthusiastic about finding one.

"In fact, GM didn't seem too excited about promoting the Nova until this year."

UAW Local 2244 officials, in their meeting with Burger, also criticized GM's promotion of the Nova. "They were looking for national TV ads during the Super Bowl game," said Burger.

But Burger told the NUMMI workers that GM was concentrating on regional advertisements of the car.

DeJesus said the union has decided to promote the car on its own.

"We're going to shopping malls all around California and we're handing out pamphlets on the car," DeJesus said. "We're going to display the car itself as much as we can; and we're going to state and local agencies to ask them to buy the car" in fleet purchases.

He said, "Hey, we know we got a good product here. We're going to turn this thing around."

MODEL YEAR*.....NOVA...........TOTAL ...................(NO. OF CARS)...CHEVROLET ..................................(NO. OF CARS)

1985............16,323.........1,653,854

1986...........170,661.........1,748,160

1987...........140,664.........1,526,347

1988**..........15,321...........366,791

*Model year runs Oct. 1 to Sept. 30.

**Oct. 1, 1987 to Jan. 20, 1988.

NOTE: Nova was introduced (went on sale) on June 10, 1985 -- restricted to 26 midwestern states. The first full year of sales nationwide was 1986.

General Motors Corp. Chevrolet Division offered new sales incentives on NOVA beginning Jan. 28, 1988 (The program ends Feb. 29, 1988). The incentives include a $600 rebate to buyers who own a domestic car or no car. The rebate goes to $1,200 for "conquest sales" -- involving buyers who can prove ownership of an import, which they have the option of trading in for credit above $1,200. Chevrolet claims that the rebate program has boosted NOVA to 11% of total sales.