Remember when we were exiting the pandemic, business roared back to life, but we couldn’t get what we needed? The pundits were saying “We might not get through this until 2025!” Hard to believe, but we’re staring 2025 in the face.

Are the pundits right? Here are some markers to keep an eye on.

Supply is (mostly) back.

Dealer lots are filling up with passenger cars and pickups. Incentive spending in July was 60% higher than a year ago, according to Cox Automotive.

On the truck side, Work Truck Solutions’ data for new box trucks and service trucks show average days-to-turn (DTT) are at or exceeding pre-pandemic levels.

Remember when you couldn’t get a cargo van to save your life? They’re plentiful now, but it depends on the manufacturer — an oversupply by one will tilt the overall scales. DTT for cargo vans has risen dramatically since the throes of 2022, but not yet to 2019 levels.

Prices for new commercial vehicles will stay high.

New light-duty vehicle prices have been on a 10-month downward trend, partly driven by deep discounts for EVs.

On the commercial side, new vehicle prices spiked during the supply chain crisis. While supply is finally rising, new vehicle prices haven’t dropped commensurately.

Work Truck Solutions’ data shows that prices for new commercial vehicles have softened somewhat in Q2 but are still well above 2019 levels. Even if supply rises further, with the higher cost of everything, don’t expect prices to fall that much.

Operating costs are fluctuating but remain elevated overall.

Maintenance data from Fleetio reveals a 7% jump in costs for the most popular service tasks in the first half of 2024 compared to the second half of 2023. Prices for lubricant grease jumped by over 100%, as lithium is a common component in grease but in EV batteries.

Insurance rates are still on the rise. According to Insurify, consumer rates could rise as much as 22% in 2024 after rising a whopping 24% in 2023. Fleet insurance rates won’t see those spikes but have seen consistent increases over the last five years, which will continue.  

The inflation rate continues to moderate. Prognosticators are expecting the Fed to make a quarter-point rate cut on Nov. 1, helping to ease the cost of financing a vehicle.

Another welcome relief, both diesel and gas pump prices are on a continued downward trend.

Right now, fleets are facing declining depreciation, which is contributing to a higher total cost of ownership. But used prices are likely to firm up somewhat:

A lack of lease maturities will finally hit the wholesale market.

We’re at the three-year anniversary of the supply chain challenges of 2021 that led to the decline in new vehicle sales and leasing. What does that mean? “We are at an important inflection point,” wrote Cox Automotive’s Chief Economist Jonathan Smoke in an email exchange with Automotive Fleet.

After growing in the wholesale market over the last two years, we’re in the midst of a big decline in lease maturities. Smoke predicts that between now and the end of 2025, lease maturities will fall by roughly 800,000 to 1 million on an annualized basis.

“My hypothesis is that as franchise dealers come up short on what they are used to seeing returned to them monthly, they are going to the market to find units to replace,” Smoke wrote. “It’s incremental, but it’s enough to cause the days’ supply at wholesale to tighten, and we’re seeing retail used supply tighten too.”

Smoke said this is happening at the same time that new and used prices are returning to a more normal relationship. This is after the spike in prices followed by two-and-a-half years of price erosion.

“We do not have high supply [ignoring EVs], and we’re far away from 2019 levels of discounting and incentives,” Smoke said. “I think manufacturers have been cutting production to align with a 15.5-16 million demand world so we’re no longer seeing gains in supply like we were a year ago.”

The EV push is slowing down but still moving in pockets.

We’ve all seen the news of manufacturers pulling back on battery factory openings and electric vehicle model plans. However, EV sales are still growing incrementally, particularly as supply increases. It’s just becoming clear how unevenly that growth is by geography, fleet type, and vehicle class.

Corporate fleets are pushing forward with their electrification efforts, and the recent price drop on new EVs is definitely helping. However, the commercial EV market has barely gotten started, and growth is painfully slow.

So, there are still EV oases and deserts. For a snapshot of how this is playing out, create a map of the country by state around these factors: Section 177 (CARB following), infrastructure and vehicle incentives beyond federal, largest climate impacts, EV charging savings vs. filling up with gas, and public charger availability.

As regulations still dominate, the election in November will have a large say in penetration for the immediate future.