Managing Fleet Costs in an Era of Permanent Volatility

“Judging from today’s ongoing supply chain disruptions, the unexpected may be the new norm, and fleets need to prepare for that.”

That was the final line from a 2021 Automotive Fleet article that detailed how supply-chain disruptions upended vehicle production and fleet replacement schedules.

Five years later, the prediction is still valid. Wars in Eastern Europe and the Middle East, along with widespread tariffs, have introduced new uncertainty even as vehicle availability has improved.

The semiconductor shortages and reduced fleet allocations of 2021 may be behind us, but the challenge remains: building budgets and replacement plans around costs that may never be predictable again.

According to Ed Powell, director of consulting services at Holman, fleet operating costs remain more than 20% above 2020 levels, with maintenance, vehicle acquisition, and fuel as the most significant pressures.

Element Fleet Management's Strategic Advisory Team reports a similar convergence of expenses. Fuel, maintenance, financing, and aging assets are all affecting budgets simultaneously, leaving less room for inefficient vehicle specifications, underutilized assets, or poorly timed replacements.

The Fuel Cost Yo-Yo

According to the U.S. Energy Information Administration (EIA), average U.S. retail gasoline prices rose from about $2.38 per gallon in January 2021 to $3.84 in 2026 year-to-date (Oct. 16), a 61.3% increase.

Diesel prices climbed even more sharply over the same period, from about $2.70 to $5.07 per gallon, an 87.8% increase.

Element's U.S. portfolio data show average fuel prices rising from $2.80 in the first quarter of 2026 to $4.22 in the third quarter, a rise of almost 51% over three quarters.

For Charlie Stevenson, fleet manager at Essential Utilities, fuel has been the largest cost increase of 2026.

The company projects its fuel spending will exceed budget by approximately 25% by year-end. Stevenson said the increase was unexpected, with diesel purchases at record highs.

Essential Utilities has responded partly through vehicle selection, adding more four-cylinder pickups to improve fuel economy.

Hilti, manufacturer of equipment for the construction and building industries, has faced similar pressure. "Fuel is our biggest bucket increase so far in 2026," said Taylor Murphy, Hilti's fleet vehicle manager.

The company has offset some of the increase through improved fuel efficiency and continues to replace older, fuel-intensive internal combustion engine vehicles with hybrids and battery-electric vehicles where appropriate.

Maintenance Costs Keep Climbing

Maintenance and repair costs are not far behind in terms of budget pressure.

Holman reports maintenance prices rose about 8% year over year in 2026, reflecting higher parts prices and labor costs. Element's portfolio data show average repair transactions increasing from $523 in 2024 to $549 in 2025 and $575 in 2026.

Vehicle age compounds the problem: Holman's analysis puts annual maintenance spending at approximately $2,000 per vehicle in its first year of service, compared with more than $4,500 for vehicles 10 years or older.

That is particularly consequential for fleets that extended vehicle lifecycles during the supply shortages and have not yet returned to their previous replacement schedules.

Repair Environment — A Mixed Bag

The repair environment has improved in some respects.

Justin Lisonbee, assistant vice president of fleet operations at Enterprise Fleet Management, said parts availability is considerably better than it was several years ago, and widespread supply-chain disruptions have become less common.

However, Mike Albert Fleet Solutions points out continuing pressure from specialized parts, labor, and vehicle technology.

Jenny Baker, manager of fleet maintenance at Mike Albert, expects these pressures to persist into 2027, even if the pace of year-over-year cost increases moderates.

Some encouraging news: TechForce reports that automotive training completions increased in the latest academic year, and collision-repair graduates rose 14.2%. That suggests the training pipeline is improving, though it still falls short of projected demand.

Vehicle Availability Improves, but Replacement Costs Remain High

One of the clearest changes since the supply-chain crisis is improved vehicle availability.

According to Jess Cramer, vice president of fleet strategy and vehicle acquisition at Enterprise Fleet Management, ordering has become more predictable, though certain commercial configurations and high-demand vehicles can still be difficult to source.

Acquisition costs remain elevated. Most vehicle segments are experiencing low-single-digit price increases, Cramer said.

Jason Kraus, vice president of operations at Mike Albert Fleet Solutions, said factory-order availability has generally improved, but vehicle prices keep rising as manufacturers add equipment and safety technology.

Kraus said fleets buying from dealer stock may face a shortage of lower-cost base trims, with available inventory weighted more toward mid-level and higher trim packages.

That can force a fleet to pay for equipment it doesn't need, especially when it needs a replacement vehicle immediately.

Element's sales-fleet data illustrates the longer-term acquisition-cost trend. Average factory-order capitalized costs increased from approximately $40,800 for model-year 2023 vehicles to $44,500 for model-year 2026 vehicles, an increase of about 9%.

Resale values offer some relief. Holman reports favorable conditions for certain fleet assets, although Cox Automotive's Manheim Used Vehicle Value Index declined 0.6% year over year in September. How much a fleet recovers at resale remains an important variable in the replacement calculation.

Aging Fleet Meets Remarketing Timing

Holman reports that replacement orders from 2023 through 2025 ran more than 40% below the levels it recommended for the fleets analyzed. The company estimates that average fleet vehicle age is approximately six years, with a concentration of older assets in their 10th and 11th years of service.

Element's service-fleet remarketing data shows a similar trend. Average months in service rose from 67.2 in 2024 to 81.3 in 2026, an increase of about 21%.

Yet average odometer readings at sale increased only about 7% over the same period, from approximately 104,800 to 112,000 miles.

Why would fleets keep vehicles longer without accumulating substantially more mileage?

One explanation is that fleets are retaining older vehicles as spares to cover extended repair downtime, collision repairs, or replacement delays.  An older vehicle has already absorbed much of its depreciation, so keeping it as a backup may cost less than buying a replacement.

Hold, or Replace?

Hilti has kept some older, lower-mileage vehicles, but Murphy said rising transmission, engine, and electrical repair costs make continued operation less attractive.

Replacing those vehicles, however, could increase lease costs by a mid-teens percentage, creating another challenge for the company's operating-expense forecast.

Essential Utilities faces a similar problem. Stevenson said the company cannot increase its 2027 replacement budget despite rising vehicle and equipment prices. Instead, it must identify the existing vehicles with the highest operating costs and determine which replacements will deliver the greatest benefit.

Fleetio's 2026 benchmarking data shows that vehicles 10 years and older accounted for 12% of miles driven but 34% of service spending. Still, age alone shouldn't dictate replacement.

“There’s no set age or mileage when an asset becomes cheaper to replace,” said Dan Simpson, manager of product marketing at Fleetio. “It comes down to what you expect to spend keeping it running compared with what a replacement would cost to do the same job over the same period.”

The question is not whether older vehicles cost more to maintain. Generally, they do. It is whether those additional costs exceed the expense of replacing them under current market conditions.

Collision Repairs Add Cost and Complexity

Collision repair presents another challenge, especially as vehicle technology changes what it takes to return damaged vehicles to service.

Robert Martines, CEO of Corporate Claims Management, said replacement parts, specialized materials, labor, and vehicle electronics continue to increase repair expenses.

He cited a door skin that previously cost $250 can now cost $400 or more.

Modern vehicles also require additional procedures when cameras, radar sensors, and other safety systems are affected. Repairs that once involved replacing a bumper, mirror, windshield, or headlamp may now require diagnostic scans and recalibration of ADAS components.

Martines estimates that associated diagnostic and calibration procedures can add hundreds of dollars, and in some cases $500 to $1,500, to a repair.

Repair complexity can also affect downtime. Vehicles may require specialized facilities, additional technician hours, or multiple steps before they can return to service.

For fleet managers, collision costs extend beyond parts and labor to replacement transportation, employee productivity, and potential insurance implications.

Finding Savings in What Fleets Can Control

Although fleets have little influence over fuel markets, vehicle manufacturers' pricing, or broader labor conditions, they still control vehicle selection, utilization, and operating practices.

One strategy gaining renewed attention is right-sizing.

Rather than replacing each vehicle with a newer version of the same model, fleets are reassessing the actual work the vehicle performs.

Alexa Rubin, manager of truck upfit at Mike Albert Fleet Solutions, said some work truck fleets are designing specifications around the jobs vehicles perform most frequently rather than the most demanding task they might occasionally encounter.

Kraus said fleets are reconsidering whether every application needs a half-ton pickup or whether midsize models could do the job. They are also evaluating which duty cycles need four-wheel drive, particularly in regions where road conditions and operating requirements do not justify it.

For suitable duty cycles, hybrids can reduce fuel consumption without the charging infrastructure and operational adjustments required by battery-electric vehicles.

Planning for 2027 Without Assuming Stability

Some cost pressures may moderate in 2027, helped by better vehicle availability and fewer supply-chain disruptions. But lower inflation doesn't necessarily mean lower operating costs.

Fuel remains unpredictable, while aging vehicles and increasingly complex repairs continue to strain maintenance budgets. Higher acquisition costs also make replacement decisions more consequential.

With little certainty about where costs are headed, fleet managers will need to concentrate on the expenses they can influence. One thing remains true in the fleet environment of 50 years ago, today, and the future: There are always opportunities to improve operating efficiency without compromising the fleet's ability to support the business.