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As 2025 ends, fleet operators are navigating a market in transition. Falling interest rates and lower fuel costs are finally providing some financial breathing room, while used vehicle values start to settle after several years of record highs. However, challenges persist as tariff-driven cost pressures rise and supply constraints in hybrid and EV inventory continue. This quarter underscores the importance of staying agile in planning and taking a smart, timing-driven approach to remarketing as we head into 2026.
Economics: Falling interest rates in the U.S., Canada, and Mexico are easing borrowing costs, but inflation and tariffs continue to strain fleet budgets.
Fuel: Gasoline and diesel prices hit multi-year lows in Q4, offering immediate budget relief and a strategic window to invest in efficiency.
Remarketing: Used vehicle values are softening, while fleets shift focus from EVs to more practical hybrids amid cost and infrastructure concerns.
Economics: Falling interest rates in the U.S., Canada, and Mexico are easing borrowing costs, but inflation and tariffs continue to strain fleet budgets.
Fuel: Gasoline and diesel prices hit multi-year lows in Q4, offering immediate budget relief and a strategic window to invest in efficiency.
Remarketing: Used vehicle values are softening, while fleets shift focus from EVs to more practical hybrids amid cost and infrastructure concerns.
The fourth quarter of 2025 brought notable relief for fleet operators. Fuel costs plunged to their lowest levels in years, easing pressure on operating budgets. Interest rates also continued to fall across North America, lowering financing costs for new acquisitions and renewals.
At the same time, used vehicle values continued their gradual return to more typical levels after a prolonged hot streak, though they remain elevated relative to pre-pandemic norms. Together, these trends present a mix of opportunities (cheaper fuel and financing) and challenges, including softening resale values as fleets close out the year and plan for 2026.
In our Q4 Report, we break down the latest fleet management trends in three areas: economics, fuel, and remarketing.
Interest rates ease in North America
After an extended period of tight monetary policy, Q4 brought a shift. In September and October, the U.S. Federal Reserve enacted back-to-back 0.25% cuts, bringing its benchmark rate down to a range of 3.75% to 4.00%. Similarly, the Bank of Canada cut its overnight rate to 2.50%, the lowest level in three years. Mexico followed suit, with its central bank reducing its key rate to 7.50% by Q3 and signaling further cuts ahead. These moves directly eased borrowing costs for fleet vehicle loans and leases, improving the financing outlook for 2026.
For fleet operators across the U.S., Canada, and Mexico, these moves mean lower interest burdens and a better environment for refinancing and investing in upgrades.
Tariffs and cost inflation persist
While monetary policy offered some relief, fleets still faced inflationary headwinds from trade frictions and general cost pressures. Tariffs introduced earlier in 2025 continued to filter through to higher prices on vehicles, parts, and services. In Canada, for example, U.S. import tariffs not only hurt export-oriented industries but also increased the cost of vehicles, parts, and maintenance services that fleets rely on. Fleet budgets in Q4 absorbed these added expenses, a situation echoed in the U.S. where ongoing trade disputes kept certain commodity and component costs elevated.
A J.D. Power study found that 36% of U.S. new-vehicle buyers said tariffs accelerated their purchase timing (with 87% of those affected buying sooner than planned), suggesting many rushed acquisitions in 2025 to get ahead of potential price hikes.
Recommendations
Take advantage of falling interest rates by considering financing your vehicles or accelerate planned capital investments.
When budgeting for 2026, build in contingencies to protect against cost volatility. Tariffs and inflation may continue to push up prices for vehicles and parts, so allowing room in your budget can help absorb unexpected increases.
Gas and diesel prices fall across the U.S. and Canada
Q4 2025 delivered a welcome downturn in fuel costs. In the U.S., regular gasoline averaged $3.06/gal in October, down approximately 3% from September and 2.5% lower than the same time in 2024. Diesel averaged $3.68/gal, also down month-over-month. Canadian fleets experienced parallel relief: gas fell to C$1.37/L and diesel to C$1.55/L.
These price declines came from increased refinery output (94% utilization in the U.S.) as well as moderating global demand and strong supply from OPEC+ countries. Patrick De Haan, GasBuddy’s head of petroleum analysis, noted that Americans are now spending the smallest share of their paycheck on gasoline in many years, thanks to the combination of lower prices and wage growth.
The net result for fleets: fuel budgets often ran under plan, offering welcome flexibility heading into 2026.
2026 forecast and strategic implications
Looking ahead, the U.S. Energy Information Administration (EIA) projects that retail gas prices will average $3.09/gal in 2025 and could drop to as low as $2.75/gal in 2026. Diesel is expected to follow a similar pattern. Barring a significant supply disruption, prices should remain stable through the winter months.
Fleet managers can take advantage of the current low-price environment by evaluating long-term fuel contracts. Fuel savings can be redirected into preventive maintenance, driver training, or route optimization systems to build operational resilience.
Recommendations
Lock in savings through bulk fuel contracts while prices remain low.
Consider reinvesting in efficiency-building initiatives like preventive maintenance or telematics.
Used vehicle market stabilizing
Used vehicle values began to soften in Q4, though they remain elevated compared to pre-pandemic levels. The Manheim Used Vehicle Value Index showed an approximate 2% drop from September to October and a flat trend compared to October 2024. This seasonal dip is consistent with trends seen when new-model inventory enters the market.
In Canada, the average listing price of a used vehicle in early November was around C$37,260, down slightly from midsummer but still higher than the $34,250 average a year prior.
Retail demand held firm, keeping wholesale inventory below the industry-average 30-day supply. Compact and midsize sedans continued to perform well due to sustained consumer demand, while segments with weaker demand (e.g., luxury sedans, high-mileage trucks) showed greater price sensitivity.
Fleet managers could revisit 2026 residual value assumptions accordingly and consider accelerating remarketing for aging assets while values remain favorable.
Shift from EVs to hybrids gains traction
Field intelligence from Element’s client teams reveals a meaningful pivot. While interest in electric vehicles (EVs) has cooled, demand for hybrids is growing. RBC has significantly lowered its 2030 EV adoption forecast for the U.S. from 35% to 17%. Fleet operators cited high EV acquisition costs, infrastructure challenges, and limited charging availability, especially in colder or rural areas, as key deterrents.
Conversely, hybrids are viewed as a practical, cost-effective alternative. They require no charging infrastructure and offer improved fuel efficiency. However, supply constraints continue to limit access: OEM allocations for popular hybrid models, including light-duty trucks and sedans, remain tight across North America.
Fleet sustainability conversations continued to evolve. While some clients deprioritized EV mandates, many are now pursuing emissions goals through other means, such as hybrid integration and telematics-driven fuel efficiency tracking.
Recommendations
Proactively remarket aging units before further softening.
If your fleet is not yet ready to transition fully to EVs, hybrids are a great solution for many organizations.
Q4 2025 signals a shift toward stability, as easing interest rates, steadying fuel prices, and a cooling used vehicle market create a more predictable environment for fleet leaders. While inflation and supply challenges remain, the groundwork is in more deliberate, data-driven decision-making in 2026.
Element’s Strategic Advisory Services can help you plan your next move with confidence. Get in touch to learn how our team can support your goals and help you navigate what’s ahead.