Industry forecast: What to expect in 2026

Fleets aren't built in one day or model year. 2026 should provide an opportunity to develop and execute a plan to cycle out more units acquired before or during the pandemic.

Keep in mind that 2026 plans should include several contingencies or "audibles" based on potential market changes. This differs from 2019, when you likely built one plan and executed it without making any changes.

At Mike Albert, we view 2026 as the year of disciplined optimization: utilizing better data, clearer cost signals, and a more predictable production environment to right-size fleets, lock in savings, and make smarter investments in technology and powertrains.

Below is a 2026 outlook framed for working fleet leaders—what's changing, what's settling, and where we think you should focus.

What are some of the fleet industry's "action items" for 2026?

1. Plan around a "steady but not cheap" vehicle market

• Production slots and new-vehicle inventories are far healthier than they were in 2021–2023, but prices and content levels remain structurally higher than pre-COVID. Cox Automotive points to a more balanced US market, with new sales stabilizing around 16 million in 2026, still down from 2019 levels at over 17 million light-duty vehicles.

2. Use the rate environment to your advantage—without ignoring tariffs

• JP Morgan is forecasting a 65% probability of expansion, with most of the likely impact stemming from elevated inflation and interest rates due to labor constraints and trade imbalances.
• The Federal Open Market Committee (FOMC) of the US Federal Reserve is expected to reduce interest rates by 50 basis points throughout 2026, leaving them still above historical levels.
• The impact of tariffs (e.g., Sector 232 on imported aluminum, steel, vehicles, or automotive components, or Sector 301 on microchips) will remain in place as changes in manufacturing take significant time (years, not quarters). This impact will continue to be felt in vehicle pricing, as well as related expenses such as transportation/destination fees and service components.

3. Treat powertrain strategy as a portfolio decision, not a binary EV bet We recommend viewing your fleet from a powertrain portfolio perspective. Allocating new vehicle purchases towards powertrains based on factors such as fuel economy, percentage of the time idling, and price of energy (fuel and electricity).

• Electrified powertrains include hybrids (HEVs), plug-in hybrids (PHEVs), and electric vehicles (EVs). While the EV share of your fleet may be holding constant or decreasing slightly, chances are that the hybrid share is increasing.
• Hybrids will improve fuel economy for your fleet, but make sure you understand the total cost of ownership (TCO) compared to gas- or diesel-powered options to make the right decision for your needs.
• For example, hybrid production will increase with the Toyota RAV4 Hybrid as the standard. At the same time, the RAV4 gas model is being discontinued, aligning with Toyota's approach to the Sienna and Camry over the past several years. Other hybrid options added include the Hyundai Palisade, Kia Telluride, Subaru Crosstrek, and Subaru Forester, among others.
• AAA reports that the average price of regular gasoline in December 2025 is $2.85/gallon, down 7% from the $3.04/gallon reported in December 2024. The average cost of diesel in December 2025 is $3.58/gallon, up 2% from $3.50/gallon in December 2024.

4. Expect regulation to keep nudging you toward lower emissions and more safety tech

• The EPA has announced revisions to decrease CAFE standards, from the prior goal of 50.4 mpg in 2031 to an updated goal of 34.5 mpg. This reduces the need for OEMs to convert gas/diesel engines and/or models to EVs, as announced during the prior US administration.
• California's Advanced Clean Fleets regulations still apply to local and state fleets, but no longer apply to private fleets.
• NHTSA's continued implementation of SAFE is intended to reduce vehicle crashes and the severity of damage or injury when they do occur. This includes automatic emergency braking (AEB) for pedestrians as part of further improvements to advanced driver assistance systems (ADAS).

5. Double down on telematics, embedded data, and AI—not as "nice to haves," but core tools

• Multiple sources point to telematics, video, and analytics as central to controlling TCO, improving safety, and navigating technician shortages in 2026. Fleet Management Weekly reports that 58% of fleets already utilize telematics or connected vehicle solutions, with more expected to come online in the coming year.
• Geotab's founder and CEO states the following regarding 2026, "Treating AI (Artificial Intelligence) as an operational partner, powered by reliable data, is what will separate the leaders from the laggards in an increasingly complex environment." We agree wholeheartedly.

With that backdrop, here are the primary building blocks of a successful 2026 fleet strategy.

Supply chain & availability: from crisis mode to managed risk

Where we are now

By late 2025, new-vehicle inventories had largely recovered from pandemic lows, and production constraints—especially chip shortages—eased materially. Industry data from Cox Automotive and others show:

• Normalizing new vehicle inventory around 70 days on-hand, though still below "old normal" in specific segments. This can vary by make, geographic market, and powertrain.
• Used vehicle inventory and credit conditions are improving, supporting more predictable remarketing and replacement decisions.

What to watch in 2026

• Segment-specific tightness: Vehicles in base-trim levels, as well as hybrid powertrains, will continue to face challenges in sourcing at scale in local markets.
• Order to delivery (OTD) hovering above historic averages: In our 2025 forecast, we noted OTDs around 18–20 weeks—shorter than the worst of the crunch, but still well above the 12-week 2015–2019 norm. Expect 2026 OTDs to remain elevated, around 20 weeks.
• Tariff-driven volatility: As we highlighted in our import tariff summary, US tariffs on vehicles, steel, aluminum, and key battery minerals can spike costs for both new units and aftermarket parts, especially if trade tensions with China or other suppliers flare again

How to respond

• Lock in planned model years now. Treat OTD as a structural constraint and work backwards from in-service dates, rather than relying on spot buys.
• Model "build vs. buy vs. keep" regularly. With used values normalizing and rates easing, your optimal cycle may look different than it did 18 months ago.
• Use spec discipline. Minimize "nice to have" vehicle equipment or upfit content that adds cost and lead time without impacting mission-critical capabilities.

Costs, interest rates, fuel, and tariffs: a mixed but more predictable picture

• Interest rates: Fed cuts bring the benchmark rate range into the high 3% to ~4% band.
• Fuel: US gas around the low $3/gallon range and diesel under recent highs, with the US Energy Information Administration projecting further modest declines into 2026, barring major disruptions.
• Tariffs & inflation: Still a meaningful headwind for vehicles, parts, and shop labor. It's still to be determined whether prices will continue to increase in 2026 at the rate seen in 2024 and 2025, or hold at 2025 levels.

What to watch in 2026

• Opportunity window for refinancing and capital programs: If you extended lifecycles during the peak of the rate hikes and supply crunch, 2026 may provide a good opportunity to rationalize the fleet under more reasonable borrowing costs.
• Ongoing maintenance inflation: Technician shortages, ADAS calibration complexity, and higher parts and materials costs will keep shop rates elevated—even if headline inflation cools.

How to respond

• Re-underwrite your TCO. Revisit your total cost models for each key segment, incorporating current fuel forecasts, incentive rules, and tariff assumptions.
• Budget for higher repair complexity. As ADAS and electrified systems proliferate, plan for higher "per event" repair costs, even if frequency improves with better safety tech.
• Use rate relief strategically. Favor investments in lifecycle optimization, safety, and data infrastructure over marginal "nice to have" vehicles.

Powertrain strategy: Hybrids, plug-in hybrids, EVs, Internal Combustion Engines (ICE, such as gas or diesel) in 2026

• Toyota has redesigned the 2026 RAV4 to offer hybrid and plug-in hybrid variants, no longer offering a gas version. This mirrors Toyota's prior decisions for the Sienna and Camry models.
• More plug-in hybrid variants continue to launch in the market, often offering 40+ miles of EV-powered range and overnight level 1 charging (standard 120V AC outlet). This means reduced fuel costs and a charger for under $200.

How to respond

• Think like a portfolio manager. Treat ICE (gas and diesel), hybrid, plug-in hybrid, and BEV assets as a balanced portfolio matched to duty cycles, geography, and upfit content—rather than chasing a one size fits all powertrain.
• Pilot, don't plunge. Start or expand structured hybrid, plug-in hybrid, or EV pilots in routes that are operationally and infrastructurally "friendly," while you learn real-world performance and charging behavior.

Regulation: emissions, safety, and compliance

The regulatory landscape in 2026 won't be static, but some directional signals are clear:

• State-level rules: California's Advanced Clean Fleets (ACF) rule and other state adoptions are already reshaping purchase decisions for regulated fleets and suppliers. Fleet Management Weekly
• Safety and ADAS requirements: Federal moves toward AEB mandates and state-level policies (such as discussions on speed limiters) will continue, pushing more advanced safety tech into standard specs.

How to respond

• Scenario plan your regulated segments. Map vehicles and routes that fall under emerging state or federal rules and build "with and without" scenarios for your 2027+ acquisitions.
• Spec safety by design. Treat ADAS as a core element of duty-of-care and risk management, not just a driver preference.
• Align compliance and ESG. Use the same data and reporting backbone to satisfy regulators, customers, and internal ESG stakeholders.

Data, telematics, AI, and embedded technology

In our 2025 forecast, we highlighted the rise of embedded telematics and AI. In 2026, those capabilities move further from "innovation" to "operating system."

• Fleet Management Weekly's 2026 outlook emphasizes electrification, data-driven optimization, driver focus, and right sizing as the four big trends—and all four rely on better data and analytics
• Recognize that you may need a fleet management partner to help collect and provide actionable data insights to all of the data sources you have.
• Understand how existing or potential partnerships will protect your data.
• Motorq reports that 96% of new vehicles have factory-installed modems that can share telematics data to support your operations. This number only reduces to 86% looking at the past three years of OEM production
• Geotab and others have pointed to 2026 as an inflection point for telematics camera use, as it provides event-based recording to adjudicate your drivers, offers driver coaching, and more.
• Couple your maintenance and telematics programs using predictive analytics that are straightforward for you and your drivers, such as Albert IQ.

What to watch in 2026

• OEM embedded data vs. aftermarket devices. More OEMs will push their own data platforms. As we noted in our 2025 article, open, standardized data is still not guaranteed, especially if you run a mixed make fleet.
• Platform sprawl vs. consolidation. Many fleets now juggle separate tools for telematics, fuel, maintenance, safety, and EV charging. 2026 is the year to simplify.

How to respond

• Pick a primary data "spine." Decide which platform will be your system of record and insist that others integrate with it via API, rather than maintaining multiple "sources of truth."
• Connect data to dollars. Tie telematics and AI initiatives to specific financial objectives: fewer road calls, reduced idle time, better utilization, and lower collision frequency. Talk with other fleet managers about their AI use to support your business case(s).
• Use data to support drivers, not just police them. Fleet Management Weekly and others stress that the best fleets retain drivers by using data to reduce frustration and improve safety, not just by enforcing rules.

People: driver retention, technicians, and the evolving fleet role

People remain your scarcest resource as we move from 2025 to 2026

• Driver shortages and turnover persist, especially in long-haul and specialized roles.
• Technician pipelines remain thin, keeping labor rates high and shop capacity tight.
• The fleet manager role is becoming more strategic, spanning multiple departments such as IT, finance, safety, and operations.

What to watch in 2026

• Driver-centric technology: Apps, safer equipment, and more predictable schedules will be essential for retention, not perks. This can include using mobile services in depot operations for preventive or repair maintenance while vehicles are parked overnight or on weekends.
• Outsourced expertise: Many organizations will lean more heavily on FMCs and partners for analytics, maintenance management, and more. Recognize that FMCs are the original fleet AI to give you superpowers.

How to respond

• Invest in the driver experience intentionally. Safe, comfortable vehicles, good specs, and sensible routes are retention tools as much as they are risk controls. OEMs like Nissan, with their zero gravity seats and Volvo's consultation with an orthopedic surgeon to design their XC90 seats, can take this to new levels to retain your drivers
• Recognize fleet as a strategic function. The complexity of regulations, technology, and dramatic cost increases over the past few years makes "fleet as a side job" increasingly risky. If fleet is still part-time for someone in your organization, 2026 is the year to evaluate if fleet should become a full-time role to achieve your goals.

How to prepare your fleet for 2026: A practical checklist

To bring it together, here are concrete steps we recommend as you update your 2025 plan for a 2026 reality:

• Re-baseline your fleet economics
  • Refresh TCO models using current fuel forecasts, interest rates, and incentive rules.
  • Stress test your budget against tariff and parts price scenarios.
• Update your replacement and remarketing roadmap
  • Prioritize high cost, high risk units (e.g., older, high mileage, more repair orders, and safety lagging vehicles). Consider evaluating by vehicle segment, then by model, as this could identify areas to right-size your vehicles.
  • Right-size your vehicles. Evaluate if drivers can complete their tasks in a slightly smaller vehicle (i.e., compact SUV versus 2-row mid-size SUV). Understand the impact this could have on upfit content (i.e., mid-size pick-up versus ½-ton pick-up). At a lower acquisition price, improved fuel economy, and therefore lower TCO, these savings can add up quickly based on the size of your fleet.
• Clarify your powertrain portfolio strategy
  • Identify routes and applications best suited for hybrids, PHEVs, or EVs in 2026–2028.
  • For plug-in hybrids, consider offering level-1 chargers for home use or level-2 chargers at the office.
  • For EVs, build a phased roadmap for infrastructure (depot, public, and/or home charging).
  • Consider offering two hybrid options to each ICE (gas or diesel) option, depending on the segment. Note that most hybrids are offered in all-wheel drive (AWD) as standard equipment.
• Consolidate and activate your data
  • Choose a core telematics/analytics platform and rationalize your existing overlapping tools.
  • Turn alerts into actions: standard operating procedures for fault codes, safety events, and utilization exceptions.
• Invest in your people and partnerships
  • Audit driver and technician pain points and address the top few with concrete changes.
  • Decide where in-house expertise stops and where a fleet management partner should step in.

At Mike Albert, our view hasn't changed: the only constant in fleet is change. What has changed heading into 2026 is that you have more levers—and more data—than at any point in the last decade.

Used well, 2026 doesn't have to be another year of reacting. It can be the year you move from "pivoting" to operating a fleet that is right-sized, data-driven, and resilient, no matter what the market sends your way. Mike Albert is here to help you achieve that elusive goal.