An Alexandria Circuit Court jury yesterday awarded more than $2 million in damages to a Washington woman who contended in a lawsuit that Rosenthal-Hayman Pontiac Inc. of Alexandria sold her a demonstrator model car without informing her that it had been substantially damaged in an accident a year earlier.

The jury, after about an hour of deliberation, awarded Elizabeth Joan Smallwood, an apartment building manager, $7,484 in compensatory damages, to cover the cost of the 1979 Pontiac Grand Prix, and $2.1 million in punitive damages, which are intended to punish a defendant for wrongdoing.

"We saw that we had an opportunity to say something, to say that the buck stops here, that a small person should not have to endure such fraudulent actions on the part of a business," juror Herman Gibb, a scientist with the Environmental Protection Agency, said in a telephone interview.

Immediately after the verdict was returned by the jury yesterday after a two-day trial, Judge Donald Kent reduced the award of punitive damages by $100,000 because it exceeded the $2 million Smallwood had asked for in her lawsuit.

Gregory D. Haight, who represented Smallwood, said the verdict "will have a tremendous effect on how any dealership does business. And I think they will think twice before doing anything like this."

James C. Judkins, an attorney representing Rosenthal-Hayman Pontiac, said last night, "I don't feel it's appropriate to make a comment at this time because an appeal may be filed."

In court papers, the dealership admitted the car had been damaged but denied that it had intentionally kept that information from Smallwood.

Attorney Frank L. Cowles Jr., a partner in the law firm that represented Rosenthal-Hayman, said yesterday that the lawyers will ask Kent to set aside the jury's verdict.

Cowles said yesterday that Rosenthal-Hayman went out of business last fall.

"The company had very little in way of assets. There is no way the $2 million will be satisfied," Cowles said in a telephone interview. He described the defunct company as "insolvent" and totally unable to pay the judgment. Cowles said he represents Robert Rosenthal, the owner of Rosenthal Chevrolet, who at one time was an investor in Rosenthal-Hayman. Cowles said, however, that there is no relationship between the two firms. Robert Rosenthal was not named in Smallwood's lawsuit.

According to court records, when Smallwood bought the Pontiac in May 1979 for $7,484, she was told that the vehicle had been used as a demonstrator at the car dealership. Almost 7,000 miles were recorded on its odometer when Smallwood bought the car, court records said.

In June, Smallwood began to have trouble with the transmission and Rosenthal-Hayman repaired the car without charge, court records said. Within a year, Smallwood noticed that the car was "pulling to the right," leading her to wonder if the car had serious structural damage before she purchased it, court records said.

Rosenthal-Hayman mechanics examined the car and found no evidence of such damage, court records said, but a second examination of the car trunk showed the car had been in a serious accident.

According to court records, William Hayman, president of the dealership, offered to repurchase the car from Smallwood, after deducting from the price 10 cents for each mile Smallwood had driven the car, which totaled more than 20,000 miles.

Smallwood had also taken her complaint to the Alexandria Consumer Affairs Office. According to Max Abraham, an investigator for that agency, Smallwood demanded a new car and when the dealership refused, she went to court.

Smallwood, who lives on Connecticut Avenue in Washington, left for a Florida vacation immediately after the jury's decision and could not be reached for comment.

"It is a very serious thing," said juror Annie Holt, a retired counselor in the District school system. "I think that a large seller, a company like that, takes advantage of a consumer. We don't want to see that happen again," she said.