Table of Content

    Do you want to start an auto repair shop business?

    Are you thinking of starting an auto repair shop? Well, auto repair is one of those businesses that allow you to earn considerable profits even by managing a small team. The business provides repair and maintenance services for automobiles. Moreover, in many cases, auto repair shops also offer aftermarket modifications and upgradation services.

    So, if you have made up your mind to enter this venture, you should first prepare a auto repair shop business plan. If you don’t know how to open an auto repair shop or how to make an accurate auto repair shop business plan, you can take help from here.

    The essence of an Auto Repair Shop Business Plan

    Over the years, we have been monitoring the operations and success of some auto repair shops in a bid to determine the strategies that they use to grow their enterprises. Here are some of the findings that we feel will have a great impact on your new auto repair shop.

    • Understand the market needs and tailoring the services right
    • Managing their resources well
    • Embracing new technology

    It is important that you learn how to cope with these problems to business continuity plan checklist reigning supreme and achieve your short and long-term goals such as achieving financial stability. Here are some of the challenges that you will face if you venture into this business without a proper auto repair shop business plan.

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    Scalability Issues

    As the auto business grows and attracts more clients, you will encounter many challenges that need to be responded to well. Simple mistakes can bring down your business no matter the success that you have achieved so far. For instance, an increase in customers can lead to the lack of enough space to store business the various materials. The most plausible solution to such a problem is by expanding your workspace or renting a large facility.

    A auto repair shop business plan is not complete if it does not give instructions on how scalability challenges or issues will be resolved. As mentioned earlier, we have been monitoring some facilities over the last three years. The research has given us an in-depth understanding of the industry, and we will use the same knowledge to come up with credible recommendations that you can use to jump the hurdles.

    In this blog, we’re providing a sample auto repair shop business plan of a startup, Auto Fix & Services.

    Executive Summary

    2.1 The Business

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    Auto Fix & Services will be a registered and licensed auto repair shop in Austin. The business will provide usual repair and maintenance services ranging from oil change to parts replacement. The business will also offer car modification and upgradation services such as window tinting, installing air filters, etc.

    2.2 Management of auto repair shop

    Running an auto repair shop requires a relatively smaller team. Still, you need to have a proper management plan. Because, without strict supervision, your workers may do some negligence during repair work – resulting in losing your customer’s trust.

    The best way to ensure efficient management is to create a comprehensive auto repair shop business plan. In which you’ll list all the details of how to start a auto repair shop and how to manage it successfully.

    2.3 Customers of auto repair shop

    Before exploring how to open up a auto repair shop you should think of who’ll be your customers. As that will enable you to do the relevant preparations.

    Auto Fix & Services identified its customers as the following groups:

    1. Professional Automobile Drivers
    2. New Car Owners (Households/ Individuals)
    3. Used Car Owners (Households/ Individuals)

    2.4 Business Target

    • To achieve an NPS score above 80 within two years of our launch
    • To achieve a CSAT score of 95 to 98% within a year of our launch
    • To earn a net profit margin of $24.5k per month by the end of the third year of our launch

    Auto Repair Business Plan - 3 Years Profit Forecast

    Company Summary

    3.1 Company Owner

    Auto Fix & Services will be owned by Robin Redford. Robin is a talented person with exceptional managing skills. He started his career by working in an auto repair shop as an auto mechanic. After working for four years, he got promoted to a managing post. However, he served as a manager for just three years and eventually decided to start his own business.

    3.2 Why the auto repair shop is being started

    Due to a great demand for trustworthy auto repair works, Robin decided to start his own shop. By starting a auto repair shop Robin wanted to make considerable profits and introduce 100 percent reliable services.

    3.3 How the auto repair shop will be started

    Step1: Write Auto Repair Shop Description

    To start an auto repair shop, the first step is to make a detailed auto repair shop business plan. For that purpose, you can read any example auto repair shop business plan available on the web like this sample business plan for auto repair shop. Or you can hire a professional to make your auto repair shop business plan.

    Step2: Make The Arrangements

    The second step is to get the licenses and permits to start an auto repair shop. After getting his business registered, Robin will rent a facility to turn it into a repair shop. At the same time, he’ll procure the machinery and tools required to provide his services.

    Step3: Recruit Your Staff

    Robin will hire the expert and certified auto mechanics for his shop. The complete list of his employees will be given in the upcoming sections.

    Step4: Promote & Market

    After that Robin will devise his sales strategy to reach out to his customers. He has decided to offer several discounts in the startup phase to get more and more customers.

    Step5: Ensure Strong Web Presence

    Lastly, you have to ensure a strong online presence so that people can find you whenever they search for the relevant services on Google.

    The costs required to carry out all of the above steps are provided in the following table:

    Auto Repair Business Plan - Startup Cost

    Start-up Expenses  
    Legal $250,000
    Consultants $0
    Insurance $34,000
    Rent $30,000
    Research and Development $26,000
    Expensed Equipment $59,000
    Signs $3,800
    TOTAL START-UP EXPENSES $402,800
    Start-up Assets $320,000
    Cash Required $341,000
    Start-up Inventory $60,000
    Other Current Assets $219,000
    Long-term Assets $230,000
    TOTAL ASSETS $1,170,000
    Total Requirements $1,572,800
    START-UP FUNDING
    Start-up Expenses to Fund $402,800
    Start-up Assets to Fund $1,170,000
    TOTAL FUNDING REQUIRED $1,572,800
    Assets
    Non-cash Assets from Start-up $1,550,000
    Cash Requirements from Start-up $373,000
    Additional Cash Raised $54,000
    Cash Balance on Starting Date $34,000
    TOTAL ASSETS $2,011,000
    Liabilities and Capital
    Liabilities $30,000
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $50,000
    Other Current Liabilities (interest-free) $0
    TOTAL LIABILITIES $80,000
    Capital
    Planned Investment $1,572,800
    Investor 1 $0
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    TOTAL PLANNED INVESTMENT $1,572,800
    Loss at Start-up (Start-up Expenses) $358,200
    TOTAL CAPITAL $1,931,000
    TOTAL CAPITAL AND LIABILITIES $2,011,000
    Total Funding $1,572,800

    Services

    Owning your own auto repair shop allows you to offer a wide range of services. From this business plan for auto repair shop, you can see the services provided by Auto Fix & Services.

    • General Automotive Repairs: Our primary service will be to do automobile repairs. We’ll repair or replace:
      • Automobile engines
      • Automobile exhaust systems
      • Automobile brakes
      • Automobile radiators
      • Ignition System
      • Electric repairs
      • Spark plug, fuel cap, and others
    • Regular Maintenance/ Service: Cars need a regular inspection of their parts and systems to ensure safety and longevity. In this domain, we’ll offer the following maintenance services:
      • Oil change
      • Tire pressure monitoring
      • Wheel alignment
      • Regulating radiator fluid, brake fluid, transmission fluid, etc.
      • Maintaining car’s air conditioning system
    • Automobile Upgradations: Many people prefer to modify and upgrade the functioning of their cars. For them we’ll be offering the following aftermarket upgrades:
      • Installing Efficient air filters
      • New Tires
      • Installing the latest stereo system
      • Brake discs
      • Backup camera
      • Turbochargers and more
    • Car Accessories: Besides providing repair and upgradation services, we’ll also sell basic car accessories including:
      • Seat covers
      • Floor mats
      • Consoles
      • Car lights
      • Dash covers
      • Mirrors
      • Fuel consumption meters
      • Steering wheel covers

    Marketing Analysis of Auto Repair Shop

    Before opening an auto repair shop business plan you should carry out detailed marketing analysis to explore the market trends and the competitors’ strategies. This critical examination will help you in introducing competitive aspects for your own shop. Moreover, in your auto repair workshop business plan you should also identify the groups of your target customers so that you can devise your policies and pricing plan accordingly.

    Note

    If you are starting an auto repair shop business plan but don’t know how to write a business plan for auto repair shop, you can take help from here. However, if you think that you don’t possess the skillset to make an accurate marketing plan, you should prefer hiring a professional marketing analyst.

    5.1 Market Trends

    According to SBDCNet, nearly 160k auto repair and maintenance shops are running in the United States – generating a collective annual revenue of $115 billion. The demand for such services is increasing because of an overall increase in automobile purchases. Along with the fact that cars need regular maintenance after a certain mileage. And that maintenance and upgradation cannot be done without proper space and machinery.

    5.2 Marketing Segmentation

    Auto Fix & Services divided its target market into separate groups to study their needs and expectations thoroughly. The detailed marketing segmentation done by them is provided below:

    Auto Repair Business Plan - Marketing Segmentation

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    5.2.1 Professional Automobile Drivers

    This will be the group of our major target customers. Professional automobile drivers such as Uber drivers, taxi drivers, bus drivers, and others, need car maintenance and repair services much frequently than all other groups. It is because of their long hour driving and large mileage. Moreover, this group is also expected to be a significant buyer of our car parts and accessories.

    5.2.2 Used Car Owners (Households/ Individuals)

    Our second target customers will be the owners of used cars. People who buy used cars often get the old parts such as seat covers, engine, brakes, replaced by newer ones. Thus, they are expected to avail of all of our services especially car upgradation and repairs.

    5.2.3 New Car Owners (Households/ Individuals)

    Lastly, new car owners who would want to upgrade their automobiles will also be our target customers. This group is usually very careful about their cars. Thus, they are expected to avail of our regular maintenance services more frequently. Moreover, they’ll also acquire our upgradation services.

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    To turn these people into potential/ repeat purchasers, we’ll offer several benefits to them. The biggest benefit our repeat customers will get is free video consultation. Whenever they encounter any problem while being far away from us, we’ll help them to resolve the issue themselves. Moreover, we’ll also send our auto mechanics to their location if the fault is of complicated nature.

    Market Analysis
    Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
    Professional Automobile Drivers 41% 45,000 48,000 49,000 51,000 53,000 10.00%
    Used Car Owners (Households/ Individuals) 37% 39,000 40,000 43,000 44,000 47,000 10.00%
    New Car Owners (Households/ Individuals) 22% 18,000 20,000 23,000 26,000 29,000 11.00%
    Total 100% 102,000 108,000 115,000 121,000 129,000 10%

     

    5.3 Business Target

    Our business targets are:

    • To earn a net profit of $24.5k per month by the end of the third year
    • To obtain a repeat purchase rate of 80% throughout our service years
    • To achieve and maintain a CSAT score of 95 to 98% within a year of our launch
    • To achieve a Net Promoter Score of above 80 within two years of our launch

    5.4 Product Pricing

    Our prices are almost in a similar range as that of our competitors. However, we still expect to get more customers due to our competitive advantages.

    Marketing Strategy

    After you have fulfilled all the requirements to open an auto repair shop business plan, you should start thinking about its promotion. To get introduced to a larger audience, you need to develop an accurate auto repair shop marketing plan.

    For your help, we’re providing the marketing strategy planned by Auto Fix & Services.

    6.1 Competitive Analysis

    1. Our auto mechanics hold ASE certification. All of our workers are highly experienced and skillful.
    2. We also provide remote auto repair services throughout Austin. However, this service will be provided in special cases where bringing the vehicle to our facility wouldn’t be feasible.
    3. Only we in the entire city provide video call assistance so that customers can repair minor faults themselves. However, this service will only be valid for return customers and repeat customers.

    6.2 Sales Strategy

    • We’ll advertise our startup through posters, Google Local ads service, and social media.
    • We’ll ensure a strong web presence to reach out to a wider audience and to keep track of our return/ repeat customers.
    • We’ll offer a 50% discount on our services for the first month of the launch.
    • We’ll offer a 15% discount on automobile accessories for the first two months of our launch.

    6.3 Sales Monthly

    Auto Repair Business Plan - Sales Monthly

    6.4 Sales Yearly

    Auto Repair Business Plan - Sales Yearly

    6.5 Sales Forecast

    Auto Repair Business Plan - Unit Sales

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    General Automotive Repairs 46,000 48,760 51,686
    Regular Maintenance/ Service 42,000 44,520 47,191
    Automobile Upgradations 31,000 32,860 34,832
    Car Accessories 13,000 13,780 14,607
    TOTAL UNIT SALES 132,000 139,920 148,315
    Unit Prices Year 1 Year 2 Year 3
    General Automotive Repairs $53.00 $61.48 $71.32
    Regular Maintenance/ Service $48.00 $55.68 $64.59
    Automobile Upgradations $49.00 $56.84 $65.93
    Car Accessories $49.00 $56.84 $65.93
    Sales
    General Automotive Repairs $2,438,000.00 $2,997,764.80 $3,686,051.60
    Regular Maintenance/ Service $2,016,000.00 $2,478,873.60 $3,048,022.98
    Automobile Upgradations $1,519,000.00 $1,867,762.40 $2,296,600.65
    Car Accessories $637,000.00 $783,255.20 $963,090.59
    TOTAL SALES $6,610,000.00 $8,127,656.00 $9,993,765.82
    Direct Unit Costs Year 1 Year 2 Year 3
    General Automotive Repairs $51.00 $58.00 $68.00
    Regular Maintenance/ Service $45.00 $51.00 $60.00
    Automobile Upgradations $45.00 $51.00 $58.00
    Car Accessories $44.00 $52.00 $57.00
    Direct Cost of Sales
    General Automotive Repairs $2,346,000.00 $2,828,080.00 $3,514,620.80
    Regular Maintenance/ Service $1,890,000.00 $2,270,520.00 $2,831,472.00
    Automobile Upgradations $1,395,000.00 $1,675,860.00 $2,020,232.80
    Car Accessories $572,000.00 $716,560.00 $832,587.60
    Subtotal Direct Cost of Sales $6,203,000.00 $7,491,020.00 $9,198,913.20

    Any questions? Get in Touch!

    Personnel plan

    It is essential to make a list of the employees you’ll need to run your business. When you write business plan auto repair shop you must make your personnel plan enlisting required staff and their expected salaries.

    7.1 Company Staff

    Robin will hire the following people for his assistance:

    • 1 Supervisor to help in the management
    • 8 Auto Mechanics to perform the major work
    • 2 Technicians to provide overall support
    • 1 Database Manager to manage company’s sites and arrange video calls
    • 1 Accountant to maintain financial records
    • 1 Front Desk Manager/ Call Operator
    • 2 General Assistants
    • 1 Sales Executive
    • 2 Cleaners
    • 1 Driver

    7.2 Average Salary of Employees

     Personnel Plan      
    Year 1 Year 2 Year 3
    Supervisor $14,000 $15,400 $16,940
    Auto Mechanics $97,000 $106,700 $117,370
    Technicians $28,000 $30,800 $33,880
    Database Manager $11,000 $12,100 $13,310
    Accountant $9,000 $9,900 $10,890
    Front Desk Manager/ Call Operator $7,000 $7,700 $8,470
    General Assistants $16,000 $17,600 $19,360
    Sales Executives $9,000 $9,900 $10,890
    Cleaners $15,000 $16,500 $18,150
    Driver $7,000 $7,700 $8,470
    Total Salaries $213,000 $234,300 $257,730

    Financial Plan

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    The last thing to do before launching your auto repair shop business plan is to create a detailed financial plan. Your financial plan should describe the expenses, net worth of your startup, projected loss and profits, and balance sheets for at least three years.

    Since startup and running costs for auto repair shops are usually high, it is essential to devise a trajectory to achieve your financial goals – provided the limited resources, sales, and investment. Understanding the importance of an accurate financial plan, Robin hired a professional financial analyst to create an auto repair shop business plan. The financial plan developed by him is given here to provide you an idea of auto repair shop finances.

    8.1 Important Assumptions

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 8.08% 8.13% 8.20%
    Long-term Interest Rate 8.30% 8.33% 8.37%
    Tax Rate 23.30% 24.70% 25.20%
    Other 0 0 0

    8.2 Brake-even Analysis

    Auto Repair Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 5353
    Monthly Revenue Break-even $135,600
    Assumptions:
    Average Per-Unit Revenue $237.00
    Average Per-Unit Variable Cost $0.68
    Estimated Monthly Fixed Cost $163,020

    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $6,610,000 $8,127,656 $9,993,766
    Direct Cost of Sales $6,203,000 $7,491,020 $9,198,913
    Other $0 $0 $0
    TOTAL COST OF SALES $6,203,000 $7,491,020 $9,198,913
    Gross Margin $407,000 $636,636 $794,853
    Gross Margin % 6.16% 7.83% 7.95%
    Expenses
    Payroll $213,000 $234,300 $257,730
    Sales and Marketing and Other Expenses $120,000 $122,000 $124,000
    Depreciation $2,490 $2,550 $2,600
    Leased Equipment $0 $0 $0
    Utilities $3,000 $3,080 $3,120
    Insurance $2,200 $2,270 $2,400
    Rent $4,000 $4,300 $4,600
    Payroll Taxes $30,000 $31,000 $32,000
    Other $0 $0 $0
    Total Operating Expenses $374,690 $399,500 $426,450
    Profit Before Interest and Taxes $32,310 $237,136 $368,403
    EBITDA $32,310 $237,136 $368,403
    Interest Expense $0 $0 $0
    Taxes Incurred $6,462 $47,427 $73,681
    Net Profit $25,848 $189,709 $294,722
    Net Profit/Sales 0.39% 2.33% 2.95%

    8.3.1 Profit Monthly

    Auto Repair Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    Auto Repair Business Plan - Profit Yearly

    8.3.3 Gross Margin Monthly

    Auto Repair Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    Auto Repair Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Auto Repair Business Plan - Projected Cash Flow

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $56,000 $60,480 $65,318
    Cash from Receivables $18,000 $19,440 $20,995
    SUBTOTAL CASH FROM OPERATIONS $74,000 $80,660 $87,113
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $75,000 $81,000 $88,000
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $37,000 $38,000 $39,000
    Bill Payments $26,000 $28,000 $30,000
    SUBTOTAL SPENT ON OPERATIONS $63,000 $66,000 $69,000
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $64,500 $69,660 $75,233
    Net Cash Flow $13,000 $14,900 $16,700
    Cash Balance $26,500 $28,100 $29,400

    8.5 Projected Balance Sheet

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $281,000 $314,720 $346,192
    Accounts Receivable $25,600 $28,672 $32,227
    Inventory $4,300 $4,816 $4,988
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $293,000 $328,160 $368,852
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $18,000 $20,160 $22,680
    TOTAL LONG-TERM ASSETS $24,400 $27,328 $30,744
    TOTAL ASSETS $296,800 $332,416 $373,968
    Liabilities and Capital Year 4 Year 5 Year 6
    Current Liabilities
    Accounts Payable $20,200 $22,624 $25,429
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $14,900 $16,688 $18,757
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $15,000 $16,800 $18,883
    Paid-in Capital $31,100 $32,000 $33,000
    Retained Earnings $56,770 $61,879 $68,067
    Earnings $219,000 $238,710 $262,581
    TOTAL CAPITAL $280,000 $305,200 $335,720
    TOTAL LIABILITIES AND CAPITAL $295,000 $332,416 $373,968
    Net Worth $279,000 $304,110 $334,521

    8.6 Business Ratios

     Ratio Analysis        
    Year 1 Year 2 Year 3 INDUSTRY PROFILE
    Sales Growth 7.05% 7.81% 8.66% 3.00%
    Percent of Total Assets
    Accounts Receivable 9.17% 10.16% 11.26% 9.80%
    Inventory 5.33% 5.91% 6.54% 9.90%
    Other Current Assets 2.10% 2.33% 2.58% 2.40%
    Total Current Assets 150.05% 151.20% 151.80% 158.00%
    Long-term Assets 11.72% 11.78% 11.84% 12.00%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.62% 4.66% 4.70% 4.34%
    Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
    Total Liabilities 7.37% 7.43% 7.50% 7.38%
    NET WORTH 100.19% 100.99% 101.92% 110.00%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.72% 97.28% 100.00% 99.00%
    Selling, General & Administrative Expenses 94.01% 96.55% 99.25% 97.80%
    Advertising Expenses 1.62% 1.66% 1.71% 1.40%
    Profit Before Interest and Taxes 40.97% 42.08% 43.25% 33.90%
    Main Ratios
    Current 37 37 38 32
    Quick 31 32 32.8 33
    Total Debt to Total Assets 0.19% 0.17% 0.16% 0.40%
    Pre-tax Return on Net Worth 74.70% 75.10% 75.70% 75.00%
    Pre-tax Return on Assets 94.09% 98.79% 103.73% 111.30%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 32.87% 33.89% 34.94% N.A.
    Return on Equity 56.18% 57.92% 59.72% N.A.
    Activity Ratios
    Accounts Receivable Turnover 7.7 7.7 7.8 N.A.
    Collection Days 100 100 100 N.A.
    Inventory Turnover 32.2 33.81 35.098 N.A.
    Accounts Payable Turnover 16.2 16.4 16.45 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 2.4 2.4 2.6 N.A.
    Debt Ratios
    Debt to Net Worth -0.03 -0.03 -0.03 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $240,000 $253,440 $267,633 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.82 0.83 0.86 N.A.
    Current Debt/Total Assets 1% 0% 0% N.A.
    Acid Test 27.3 28.1 28.9 N.A.
    Sales/Net Worth 2.1 2.1 2.1 N.A.
    Dividend Payout 0 0 0 N.A.

    Download Template Business Plan for Auto Repair Shop in pdf

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