A High-Horsepower Horatio Alger Story : Entrepreneur: A Huntington Beach man goes from sleeping in a car to cruising to the bank by providing baby boomers with parts to restore their classic muscle cars.

Christmas is just around the corner, and the thought of it brings some painful memories back to Dave Leonard.

About this time six years ago, a 25-year-old Leonard strained to save a failing auto body shop venture. Within weeks, his business went under. Bank lenders wouldn’t talk to him, he was homeless and had less than $100 in his pocket.

During those lean times, Leonard worked nights as a bartender and slept in his beat-up car in downtown Santa Ana. When his car was towed away for unpaid parking violations, he moved into the cramped and rat-infested garage of a sympathetic family nearby.

With just $150 in the bank, Leonard, a high-school dropout, invested in a new venture: Chevelle Classics Parts and Accessories Inc., a mail-order service supplying Chevrolet Chevelle and El Camino parts and accessories. He found earlier that Chevrolet, a division of General Motors, made about 3 million Chevelle and El Camino cars in 1964-72.

“I spent my days reading about marketing and finance in public libraries,” Leonard said. “I knew out there, there must still be a lot of those Chevelles on the road crying for parts and accessories.”

Through a combination of shrewd financial juggling, marketing savvy and, as he called it, “serendipity,” Leonard’s fledgling enterprise turned in $60,000 in revenue in 1985, its first year in operation.

He mailed cheap-looking catalogues he made himself to Chevelle accessories retailers, selling decals, emblems and floor mats that were bought “dirt cheap from antique auto swap meets in Pomona.”

“I was telling the suppliers that I had the money, and I was telling the people buying the parts that I had them in stock, when in fact I had nothing,” he said.

“But I knew that if I wrote a bad check on a Friday to buy auto parts from suppliers and sold the supplies at a swap meet that weekend, I could cover the check on Monday,” he said.

Leonard’s business took off the following year when baby boomers started buying big-engine cars as investment vehicles. These gas-guzzlers, often called muscle cars, have at least 220 horsepower and were made by General Motors, Ford and Chrysler from the late 1950s to early 1970s.

Despite a slowdown in the economy, the current revenue of Chevelle Classics has already exceeded last year’s $4 million, and Leonard expects to sell about $7 million in parts and accessories by year’s end.

“I feel my industry is somewhat insulated from the recession, because everyone needs parts to keep their cars going, and new cars are expensive,” Leonard said. “Since manufacturers don’t make most of those parts anymore, they have to buy from suppliers like us.”

The muscle car boom started off as a hobby among West Coast car lovers in the early 1980s, according to Jeff Smith, editor of Los Angeles-based Hot Rod, a monthly magazine that specializes in domestic high-performance cars. Because spare parts and accessories were hard to come by, muscle car prices outpaced the rate of inflation as the years went on, he said.

“A lot of people outside the motorist enthusiasts, particularly baby boomers, saw this as an investment vehicle and began buying these muscle cars for investment,” said Isaac Martin, an editor at Hollywood’s Car Craft magazine.

Just three years ago, a restorable Chevelle muscle car cost $3,000 to $5,000, Leonard said.

Today, the market price for these vehicles is $7,000 to $12,000, according to Hot Rod’s Smith, and a fully restored muscle car today could easily cost $20,000 to $30,000.

As demand grew, it opened opportunities for companies such as Chevelle Classics to thrive and even start their own parts and accessories manufacturing concerns. In the last three years alone, there has been “an explosion of parts manufacturers” who added incentive for more people “to get involved in restoring old muscle cars,” Smith said.

Leonard’s competitors--such as Santa Ana’s Danchuck Manufacturing and Ausley’s Chevelle Parts Inc. of Graham, N.C.--plan to step up reproduction of Chevelle parts and accessories in coming years and possibly expand their reproduction of parts and accessories to other models of muscle cars. Like Leonard’s company, his competitors import some parts and accessories from the Far East.

“Muscle cars, antiques and restorable cars are the way to go,” said Tat Marcy, general manager of Danchuck, a company that sold more than $7 million in Chevelle parts and accessories last year. “The demand for the parts has been great enough to justify the tooling cost.”

Leonard began manufacturing Chevelle parts and accessories in Anaheim in 1986, a move he did not regret. Some parts his company reproduced turned out also to fit other muscle cars made by GM. He also started getting orders from overseas.

Earlier this year, Leonard branched out to other GM muscle cars when he moved to his new 20,000-square-foot facility in Huntington Beach. He opened Monte Carlo Exclusive in April to provide parts and accessories exclusively for Chevrolet’s Monte Carlo models made in 1970-74.

In September, Leonard created a holding company, Original Parts Group Inc., to oversee the manufacturing activities of his companies. He plans another muscle car parts and accessories company next year--Original GTO--to supply parts and accessories for Pontiac GTOs.

For a man who was once homeless and written off by his family and friends as a failure, Leonard has done well. He has achieved his dream in a relatively short period, thanks to the unpredictable tastes of baby boomers.

“When I first told my family about my business, they told me I was a born loser,” he said. “They felt that I didn’t have it in me to succeed. I wanted to prove them wrong. So every opportunity that came my way, I took with a vengeance.”

Altogether, Leonard’s companies have more than 30 employees. His success is reflected in his annual catalogue, which is printed on glossy and colorful paper. His business acumen even drew praise from some competitors who have been around the business a lot longer.

But Leonard does not let success go to his head. He still works in a T-shirt and blue jeans. And he sports a braided “rat” tail on his nape as a reminder of those dark days when he was left homeless and only rats kept him company.

In his immaculate office just next to his showroom and warehouse, the young entrepreneur pointed to the large photographs of his wife hanging on the walls and said: “I have a beautiful wife, two beautiful babies and business has never been better. Hey, what more can a guy ask for?”