Fairfax County sheriff's deputies descended on a Falls Church auto dealership yesterday to confiscate buildings, grounds and other items after the struggling business failed to make payments on a series of loans totaling $2.6 million.
The action against Graves Quality Chrysler-Plymouth was brought by Chrysler Credit Corp., which had filed a suit in Fairfax County Circuit Court alleging that dealer William M. Graves Jr. had failed to make payment on a series of business loans. After repeated attempts to collect the money failed, Chrysler took the unusual step of obtaining a property seizure order that allowed sheriff's deputies to confiscate virtually everything in the dealership -- from cars and trucks to desks, computers and light fixtures.
Chrysler officials declined comment on the matter other than to acknowledge that they sought and received a seizure order from the county court.
Graves, reached at his dealership as the deputies were taking inventory of his property, was livid and vowed to sue Chrysler for taking such action.
"They just came in here, rounded up my people, read the order and sent them home," Graves said of the 10 deputies accompanied by Chrysler Credit officials. "I had no warning. This is a bitter pill to swallow."
Neither Graves nor Chrysler officials would comment on the exact nature of the loans Chrysler had made to the dealership. However, sources familiar with Graves's business dealings said Chrysler Credit repeatedly advanced money to Graves to cover loans and other business expenses.
Since January 1990, at least four Washington area dealerships have swallowed a similar pill -- though not in nearly as dramatic a fashion. Pressed by heavy debt and falling sales, those dealers have turned to bankruptcy courts in an attempt to work out a plan to pay back creditors.
Graves said he had been trying to settle his debts out of court. "We were right in the middle of a business workout when they did this to us," he said. "All we needed was a little help from Chrysler. We could have made it."
Other area dealers in trouble have sold their businesses, said Gerard N. Murphy, president of the Automotive Trade Association of the National Capital Area, which represents 200 dealerships. But despite some isolated cases, Murphy said most area dealerships "have their costs under control and are making it through a down market."
Nationally, auto dealership failures have risen dramatically. An estimated 900 dealerships went out of business in 1990, a 125 percent increase over the 400 dealership failures in 1989, according to figures from the McLean-based National Auto Dealers Association (NADA).
A decline in new-car sales is not the only culprit in this wipeout. Profit margins have also been squeezed, largely by a combination of higher interest rates, insurance premiums and inventory costs, NADA officials said.
Boundless optimism and a penchant for expensive experimentation appear to be the factors that did in Graves, his critics contend.
Graves rode into the Washington area three years ago with a flamboyant new way of selling cars.
The 33-year-old upstart from Florida stuck his doorless, glass-trimmed office in the middle of the showroom floor, "so that the customers can see me," he said in an interview then. He also opened a child-care facility within the dealership so that parents could shop without worrying about their children. But he also angered many of his local competitors by publicly criticizing their use of markups and other devices to boost profit margins.
Graves said that he would sell "well below the normal dealer selling price" and, according to written customer testimonials in his office, actually did so. In January 1990, with the local car market slipping deeper into trouble, Graves implemented a costly "loaner car" program in which dealership employees would, free of charge, deliver loaner cars to the homes of customers whose vehicles were being serviced at the dealership.
Privately, some Graves employees complain that dealership was neither selling enough cars nor taking in enough repair business to support such generous customer service programs. Other employees said that their boss spent too much time operating a separate consulting business.
Graves, however, sees himself as a victim. Chrysler, he said, never fully cooperated with his programs. Other dealers, including those with Chrysler franchises, attempted to put manufacturers and customers against him by spreading false rumors about his operations, he said. At any rate, time began running out for Graves last month, when he asked his then-36 employees to work for him without pay until he could secure new financing for his business. Some 22 employees -- 11 working without pay and 11 on partial salary -- were at the dealership when the sheriff's deputies shut it down.