Fury dealership survives, thrives

As divorces go, the one between Chrysler and Fury Chrysler Dodge in Lake Elmo was both costly and ultimately unsuccessful.

Which is why Tom and Jim Leonard, the brothers who co-own Fury, couldn't be happier.

The dealership that Chrysler tried to close is still open. The black plastic that had covered up their sign for more than a year is gone. The lot and showroom are filled with new cars.

Best of all, customers are in a buying mood.

"We were profitable in January and February," Jim Leonard said. "In Minnesota, most dealers are trying to dig themselves out of a hole after those two months."

The Leonards owe their good fortune to a gradually improving economy, the slowly reviving fortunes of Chrysler and their own stubborn refusal to surrender to the will of a $40 billion company.

The fight began in 2009, when a bankrupt Chrysler announced that it would eliminate 789 dealerships, or 25 percent of its total. In Minnesota, 18 dealerships made that list, and no one was more surprised than the Leonard brothers, whose South St. Paul store sells more Chrysler vehicles than any other dealership in Minnesota.

The Leonard family linked its fortunes to Chrysler in 1963, when Harold (Red) Leonard bought a South St. Paul Chrysler dealership operating out of a Quonset hut on Concord Street.

Red and, eventually, his two sons, Tom and Jim, stayed loyal to Chrysler through one bankruptcy, two government bailouts, a disastrous merger with Daimler and an ill-timed leveraged buyout to a Wall Street firm, to say nothing of the Volare and the Prowler.

Rather than scout for opportunities to open an import franchise, they doubled down with Chrysler, buying the Lake Elmo dealership in 2005 with the automaker's blessing and encouragement. By 2008, they had transformed it into the fourth largest Chrysler-Dodge dealership in Minnesota.

So, imagine their surprise to learn that Chrysler wanted to put the Lake Elmo store out of business.

"I think they figured that because we had South St. Paul, customers would follow us there and that we'd be OK," Tom Leonard said.

But it wasn't that simple. The Leonards had spent $4 million to buy the Lake Elmo dealership, and they used one bank line to buy inventory for both it and the South St. Paul store. Shutting down one would jeopardize the other. The Leonards had no choice but to fight.

They were among hundreds of auto dealers who descended on Washington to lobby for a change in the federal bailout legislation to allow appeals by dealers. That bill was signed into law early in 2010.

In the meantime, though, they had to pull the new cars from their Lake Elmo store, which represented 40 percent of revenue. They laid off almost half of the 40 employees and subsisted on used-car sales and service.

"The people of Lake Elmo really supported us through this," Jim Leonard said. "They'd bring their cars in for an oil change, even if it was a Subaru or a Ford."

That loyalty inspired Jim, who manages the Lake Elmo business, to recently buy a home in the city.

In June, an arbitrator ruled for the Leonards. He noted that 397 Chrysler dealers had closed or gone bankrupt during the recession, but that "There is no dispute that Fury as a firm has always been profitable, even during 2008 when most Chrysler dealers were not."

Fury was one of 488 Chrysler dealers to file an appeal. Only 32 won their cases, and fewer than two dozen have since re-opened. The Leonards spent about $500,000 in legal fees alone, and they figure they lost at least that much in sales during their 15 months in limbo.

In other words, they have every reason in the world to resent Chrysler, which has seen its market share in Minnesota slip from an estimated 10 percent of new-car sales in 2008 to 7.3 percent last year -- even as the total number of vehicles sold statewide has declined by about 30 percent since the peak in 2006.

But the Leonards insist that their relationship with Chrysler couldn't be better. They're excited about the new and redesigned models and the boost in marketing and advertising. Their service staff is spending less time these days making repairs under warranty.

"We've been with Chrysler almost 50 years, and without a doubt this is their best management team ever," Tom Leonard said.

Chrysler doesn't have a vehicle among the Top 20 sellers nationally, although its sales this year are running almost 17 percent ahead of a year ago. But Tom and Jim Leonard don't need monthly reports to tell them they're back in business.

ericw@startribune.com • 612-673-1736