By: Chris Brown
At the beginning of 2025, the mood in fleet could be called “cautiously optimistic but bracing for new disruptions.”
The industry had just emerged from three years of supply chain chaos. Deliveries were normalizing, allocation was only an issue with certain models, and fleets had satisfied pent-up demand from the pandemic years.
On the negative side of the ledger, costs had risen over 20% (and more) since 2020 and weren’t coming back down; interest rates remained stubbornly high; and the technician shortage was still getting worse. Residual values were stable, at least.
“Pivot” was the catchword. Fleets needed to stay nimble because just as one crisis was resolved, new wildcards (read: tariffs) appeared. In short, we began to learn to live with stability and disruption coexisting.
While the industry is no longer in crisis response, volatility remains. “Fleet leaders are being asked to deliver certainty in a world that no longer offers it,” said David Hayward, director of fleet management at ABM Industries.
Automotive Fleet connected with over 20 fleet professionals to survey their perspectives on the year ahead and how fleets should react.
2026: What the Numbers Say
U.S. new-vehicle sales are projected to reach about 15.8 million units in 2026, according to Cox Automotive, down modestly from 2025 but well above pandemic-era lows.
Meanwhile, U.S. new-vehicle inventories climbed to just over 3 million units on dealer lots by late 2025, according to Cox, equating to roughly a 90-day supply. While slightly below year-earlier levels, inventories remain well above the historic lows seen in 2021 and 2022.
Order-to-delivery (OTD) times have improved to around 15 weeks by the end of 2025, according to Saad Ahmad, senior strategic client advisor for Element Fleet Management. Mike Albert Fleet Solutions is predicting a 20-week average in 2026, up from 14 in 2019.
Dan Mullin, director of vehicle supply chain at Holman, said that while some supply constraints linger, “these challenges aren’t nearly as widespread as they were from 2021 to 2023 as the industry recovered from the pandemic-era disruptions.”
Mullin said that today, supply constraints generally only impact larger commercial vehicles and specialty units, with some limited challenges for some popular passenger vehicles and certain light-duty truck models.
Though large price increases have eased, Jason Kraus, VP of operations at Mike Albert, notes that average retail prices remain near $50,000, about 31% higher than in 2019.
Said Billy Dobosz, AVP of business development at Enterprise Fleet Management: “One challenge that has clearly subsided is supply disruption across most makes and models. The growing challenge is that vehicle prices are still rising due to elevated input costs.”
Mullin said the biggest risk to the supply chain in early 2026 is macroeconomic uncertainty. “Factors such as tariffs and regulatory uncertainty are influencing OEM production strategies, which may impact the overall supply chain and/or model availability,” he said.
While no immediate disruptions are expected, Mullin emphasized that supply chain conditions “can change rather quickly.”
2026 Costs: Maintenance, Insurance, Rental, Fuel
While depreciation has stabilized after the volatility of the pandemic years, nearly every other cost component remains elevated, or at least unpredictable.
According to Saad, maintenance cost inflation continues to outpace general inflation, driven by technician shortages, higher labor rates, and persistent pressure on parts pricing.
Ed Powell, director of consulting services at Holman, concurs. “The main area of concern remains rising maintenance costs,” he said. “As fleets age assets longer, they become more exposed to labor inflation, tariff-related parts increases, and downtime risk.”
To mitigate costs, predictive maintenance will rise in 2026, said Tim Mundahl, director of fleet consulting at Merchants Fleet. “Predictive or proactive maintenance will become available, rather than fixed-interval approaches to PM scheduling, as has been the norm for centuries.”
Insurance has emerged as another headwind on TCO. Saad, Powell, and Dobosz pointed to double-digit increases in insurance premiums over the past five years.
Rental, a valve to open as needed, has also changed. Higher daily rental rates have forced fleets to forecast more accurately to mitigate rental expense.
Alyssa Fortino, manager of data research & analytics at Holman, notes that the general expectation is that incremental rate cuts by the Federal Reserve will provide some relief in 2026. However, borrowing costs will remain elevated compared to pre-pandemic levels.
Interest rates are projected to fall to 3%-3.25% in 2026, Fortino notes, “though the timing and extent of these projected cuts remain dependent on GDP and employment trends.”
Fuel costs should offer more relief. Fortino cites EIA data showing that gasoline prices dropped about 6% in 2025. Pump prices should fall below $3.00 per gallon in 2026, the lowest annual average since 2020.
Diesel fuel should follow a similar trend.
Remarketing a Bright Spot, if You Take Advantage
Used vehicle prices remain buoyant, thanks to reasonably tight supply. The Manheim Used Vehicle Value Index is expected to rise about 2% by year-end 2026, showing a modest rebound in wholesale used-vehicle values as the market normalizes.
In 2026, remarketing success will rely on speed-to-market, vehicle-condition accuracy, and disciplined replacement cycling (rather than waiting for better market conditions), which will have the greatest influence on pricing and net returns this year, said Holly Vollant, manager of North American remarketing at Holman.
“Access to market data is no longer a differentiator; how you leverage that information and how quickly you’re able to do so will define success,” Vollant said.
Vollant emphasizes smart fleets are working with their FMCs to align remarketing considerations with model selection, spec decisions, and replacement timing before acquisition, well before units reach the secondary market.
“Organizations that approach remarketing their vehicles simply as an afterthought are leaving hundreds of thousands of dollars on the table and missing the opportunity to further reduce their total cost of ownership,” she said.
Market intelligence becomes especially critical for specialized vocational units, vehicles with complex upfitting, and heavy-duty equipment. While digital platforms continue to grow, Vollant notes that physical, in-lane auctions still influence buyer confidence and pricing.
She suggests balancing digital efficiency with hands-on oversight. Sellers must audit, visit, and hold their auctions accountable to keep their returns from eroding, she said.
Autonomous transport, finally? Autonomous driving is now advancing into real-world use in both ride-hail and commercial applications. Shown here at the 2025 LA Auto Show, Tensor’s autonomous passenger vehicle features a retractable steering wheel, allowing it to operate either as a personally driven car or within a robotaxi fleet. Autonomous trucks have been deployed in Texas, while Waymo continues to expand driverless ride-hail operations.
Photo: Chris Brown
Tariff Costs to Finally Hit Home?
Tariffs will continue to impact virtually all aspects of the automotive sector in 2026, though the environment appears more stable than a year ago, with many key trade terms now finalized, according to Holman’s Powell.
Throughout 2025, many manufacturers absorbed the bulk of tariff-induced cost increases rather than passing them on to customers. “However, this strategy isn’t sustainable over the long term,” Powell said. “We’re likely to see moderate price increases during the 2026 model-year changeover, followed by more subtle price increases during the second half of 2026.”
Powell’s advice to fleet managers is to add a 10-14% contingency buffer to operating budgets to account for ongoing inflation, particularly in vehicle maintenance and repair.
Fleet managers are bracing for greater tariff effects. “The biggest concern I have right now is how the tariffs and trade war will impact fleet, from a supply chain, vehicle price, and operating costs perspective,” said Jennifer VrMeer, fleet manager for BD, a global medical device company.
“A lot of parts come from China and Mexico. Surely OEMs are not going to absorb those. We have already seen a steady climb in cap costs in the past few years.”
The impact extends into maintenance operations. Jenny Baker, maintenance manager at Mike Albert Fleet Solutions, notes that over 90% of automotive glass is manufactured in China, which makes it more expensive and increases order lead times.
Mike Albert’s Kraus added that while increased prices are largely in place and not anticipated to rise further, “The expense of tariffs will continue to be felt in the price of vehicles (or service parts) as well as destination/transport fees.”
Beyond tariffs, Fortino notes that AI data centers continue to strain supply chains, particularly semiconductors. “If there is any disruption to the availability of these important components, it could quickly increase repair costs (and potentially vehicle downtime) while also extending lead times and/or hamper availability of certain models.”
One area of relief: the U.S. recently announced a reduction in Section 301 tariffs on microchips with China to 0% for 18 months, down from a 50% tariff, according to Kraus.
Economist Stephen Latin-Kasper, CEO of Coherent Market Planning, expects some of the tariff turmoil will settle down in 2026, but rates will remain historically high.
Expect More Regulatory Uncertainty in 2026
The year 2025 was tumultuous for policies affecting fleets, and the reverberations will continue throughout 2026, according to Michael Parr, senior advisor at HillStaffer.
“The reconciliation bill, certainly one and big but not necessarily beautiful for all, rolled back or eliminated multiple policy supports for EVs and related infrastructure, and the Administration piled on with additional actions,” Parr said.
Parr pointed to proposed regulatory changes that will dramatically change national CAFÉ requirements and EPA greenhouse-gas tailpipe standards. Meanwhile, Congress blocked or invalidated several of California’s signature EV-related regulations under CARB that were adopted by CARB-following states.
As an antidote, some states will continue to enact targeted policies to support EV adoption and use, particularly for fleets and charging infrastructure, Parr said.
Parr also pointed out China’s exploding influence. “China will continue to be the market leader on EV and battery technology, and Western OEMs will struggle to compete in markets the Chinese have access to.”
Parr also expects policy efforts to ensure fleets have fair and cost-neutral access to the data their vehicles generate, even as OEMs seek more ways to monetize data and telematics-controlled functions.
Autonomous vehicle technology will continue to evolve rapidly, and policymakers will struggle to keep up, Parr said.
Robotics, for fleets? Automation was another key theme at CES 2026, as robotics is gradually expanding to factory floors, warehouses, and field operations. While broad adoption by fleets is still several years away, early use cases are beginning to emerge. At Holman Drive 2025, Holman Vice President of Robotics Joe Foster stands alongside assets of the company’s recently launched Holman Robotics.
Photo: Chris Brown
EVs Undergo Market Correction
Fleet electrification is entering a more sober phase in 2026. The “irrational exuberance” of 2021-2023 is gone, replaced by projects with validated use cases.
Cox Automotive projects that EV and plug-in hybrid lease penetration will decline to 21% in 2026, down 3 percentage points from 2025. Adding to the uncertainty, the used EV market is bracing for an influx of off-lease units as vehicles from the 2022-2023 adoption surge reach lease maturity. This wave of supply could accelerate depreciation and erode the total cost of ownership advantage that justified many early electrification decisions.
Policy shifts, tariff uncertainty, and regulatory volatility are creating what Cox describes as “a complex and dynamic landscape” for vehicle procurement. Without CARB’s regulatory authority over private fleets, economics are increasingly driving electrification momentum rather than mandates, according to Jamie Hall, director of policy at EV Realty.
Stabilization, Not Broad Expansion
Maria Neve, vice president of eFMC Strategy at Inspiration Mobility Group, sees 2025 as a necessary market correction. “Industry-wide, 2025 separated signals from noise. The market didn’t ‘retreat’ from EVs—it sobered up,” she said, noting that pilot programs encountered unexpected constraints and ambitious projections failed to materialize.
Jeremy Dewey, manager of energy & fuel at Holman, expects fleet electrification to stabilize rather than grow broadly in 2026. “Fleets that have already embraced EVs in scenarios where they make sense—predictable routes, centralized parking, known dwell/charge times—will likely continue to expand,” he said. “Fleets that may have been trying to ‘force’ EVs into less-than-optimal scenarios are likely to pause or pivot.”
Jason Kraus of Mike Albert notes that fleets previously interested in EVs remain interested based on TCO and driver experience, though not all models available a year ago remain available today.
The Sustainability Play: Hybrids, PHEVs, EREVs
Perhaps the most significant shift in 2026 is accelerating interest in electrified vehicles that aren’t pure battery electric. Dewey contends that hybrids, PHEVs, and extended-range electric vehicles (EREVs)—in which onboard ICE engines charge batteries rather than power wheels—are poised to grow faster than pure BEVs.
Kraus sees strong interest from fleets in hybrids and plug-in hybrids that can recharge overnight on a standard 120-volt wall outlet, achieving up to 50 miles on a full charge. Billy Dobosz of Enterprise suggests that PHEVs and renewable diesel are the most applicable strategies today on the path to sustainability.
EV Economics: Cheaper Vehicles, Fewer Subsidies
While broader market data suggests caution, electrification advocates maintain that fundamental economics continue to improve, even without federal incentives.
“There’s never been a better time to adopt electric vehicles into commercial fleets,” said Josh Green, CEO and founder of Inspiration Mobility Group. “That may seem counterintuitive, given the loss of the federal EV tax credit and the heightened pessimism about EVs, but here are the facts: average battery prices fell another 8% in 2025, range continues to increase while charging times decrease, and chargers are more available than ever.”
Price convergence continues despite policy uncertainty. “Most light-duty EVs entered the market with an upfront cost premium of $12,000-$15,000 over their ICE counterparts,” said Adam Seifert, vice president of customer success and advisory at Inspiration Mobility Group. “However, OEMs are actively cutting costs, and we’ve already seen price reductions of up to $5,000 for 2025 models. EV-ICE price parity is within reach, even if the $7,500 federal tax credit disappears.”
In medium- and heavy-duty segments, Jamie Hall of EV Realty points to advancing technology such as the Tesla Semi, which combines 500 miles of range with megawatt charging. In Southern California, port-to-distribution routes—short-haul drayage operations—have emerged as one of the better early applications for electric tractors, supported by available charging infrastructure and favorable incentive programs.
Fleet Priorities for 2026
As we move deeper into 2026, the defining challenge will be maintaining operational discipline while managing cost pressures that show no signs of easing.
What can fleets do? Our respondents lined up these action items:
Right-Size Everything
“Build a plan with multiple contingencies,” Kraus advised, by anticipating order bank closures, specification changes, or sudden cost increases due to shortages or tariffs.
He also recommends right-sizing vehicles wherever possible. “Will a mid-size pickup suffice over a ½-ton pickup, or a compact SUV in place of a midsize SUV?” Kraus asks. “These changes reduce vehicle expense, fuel expense, and likely maintenance expense.”
Alexa Rubin, manager of truck upfit at Mike Albert, adds that fleets can right-size most vehicles to complete 80% of the work and maintain a smaller pool of larger class vehicles for jobs that require them.
Revisit Replacement Cycles
With maintenance costs rising faster than inflation, some fleets are reconsidering when to cycle assets. “Pay close attention to TCO and ensure your cycle strategy includes considerations related to maintenance expense,” said Rubin.
Even though a vehicle might be more expensive than it was five years ago, maintenance and parts have also increased in cost, and maintaining an older vehicle might be less viable than replacement, depending on specifications and usage, she said.
Powell of Holman recommends evaluating short-cycling or modifying lease terms to leverage favorable market conditions and optimize TCO.
Address the Safety-Insurance Cost Spike
Fleet safety is always important, but with insurance premiums skyrocketing, it is now more tied to costs than ever.
“Collision rates for fleets have increased by 24% since Q3 2024,” Ahmad of Element said, citing telematics provider data. “This increase is mainly in minor collision and property damage incidents, mostly in last-mile delivery, but provides evidence as to why fleet managers are concerned about driver safety.”
Candice Morley, director of client products at Mike Albert, sees video telematics adoption more valuable with advanced AI capabilities that detect and coach risky driver behaviors. “The benefits of a video-enhanced safety program can contribute to lower insurance premiums and protection from litigation,” she said.
Leverage AI and Telematics Thoughtfully
In 2026, technology is about smart adoption to drive better decisions. Kraus points to employing telematics via OEM-embedded or third-party devices plus data integration to start using artificial intelligence in fleet operations—such as quickly identifying which drivers need coaching based on their behaviors.
With 96% of new vehicles having OEM-embedded devices, “You have access to your data but need one single integration to evaluate and make decisions faster,” Kraus said.
Isaac Mosley, VP of information technology at Enterprise Fleet Management, sees AI moving beyond past hype and into execution. “The real focus in 2026 is enabling fleet teams to make faster, more confident decisions by integrating telematics and other data sources into everyday operations.”
Kraus makes the point that AI is a partner, not a replacement. “Fleet managers would be wise to compare AI prompts within their peer networks to aid this superpower,” he said.
Prepare for Knowledge Gaps
One of the largest continuing challenges, according to Kraus, is the continued retirement of fleet managers.
“We are losing decades of expertise as well as historical knowledge of the industry, their company, and drivers’ behaviors. All of this at a time when expense and complexity are increasing risk for companies. This means a move to consolidate fleet with other responsibilities within the company could further increase risk.”
The Year Ahead: Managing Volatility
It’s tempting to say that in 2026 fleets will find relief from the crisis-level disruptions of recent years. But if the last few years have taught us anything, we need to be prepared for unknown Black Swan events.
As we can’t know the unknown, we can prepare by making fewer assumptions and better decisions. For fleet managers, 2026 is about execution, with every decision made through a TCO lens.
“The work ahead isn’t about eliminating volatility,” said Hayward of ABM Industries. “It’s about building systems, standards, and decision discipline that absorb volatility without passing disruption on to the field.”
This article is excerpted from Automotive Fleet and should be referenced as such