Fleet management costs in 2026: What fleet managers need to know

Fleet management costs include vehicle acquisition, fuel, maintenance, insurance, driver wages and software. For most fleets, total cost per mile reached $2.26 in 2024 Open in new window, making cost visibility a top priority for fleet managers. 

Global Fleet Management Open in new window predicts that operating a fleet will continue to be expensive in the years to come. Understanding these costs and looking for ways to reduce expenses is essential to saving money and improving efficiencies across the entire fleet. 

What are fleet management costs?

Fleet costs are a combination of the total cost of ownership (TCO) plus the cost of operations for the fleet. Fleet management cost analysis is essential because these expenses directly impact a company's bottom line. By effectively managing costs, businesses can improve profitability, enhance operational efficiency and maintain a competitive edge. Fleet management software cost also plays a growing role in total fleet expenses, especially as more companies adopt digital tools to monitor and manage operations.

These costs include:

• Vehicle ownership
• Operating costs
• Fuel costs
• Driver wages

 TCO includes the following:

• The starting cost of the vehicle
• The price of the vehicle when it is sold
• The costs of the vehicle between buying and selling it.

What are fixed vs. variable fleet operating costs? 

Fleet operating costs or running costs are typically divided into two categories — fixed and variable costs. Fixed costs such as licenses, labor charges and lease payments are long-term and generally are the same throughout the year. On the other hand, variable costs change depending on different factors and would include unexpected expenditures such as:

• Collisions
• Unplanned maintenance costs
• Tolls
• Fluctuating fuel costs

How to calculate fleet cost per mile

To calculate cost per mile, let us start with calculating the TCO, one of the highest contributors to fleet costs. There are several factors that need to be included while calculating fleet costs. They are: 

• Asset acquisition
• Licensing
• Maintenance costs
• Labor and other operational costs
• Disposing of assets

After the calculation, divide total fleet costs (fixed + variable + driver costs) by total miles driven in the same period. For example, a fleet with $226,000 in annual costs driving 100,000 miles has a cost per mile of $2.26. Geotab previously developed a fleet-specific Cost-per-Mile (CpM) model that included sub-models for fixed, variable, and driver salary-related costs.

The variable models depended on two factors: vehicle class (the size of the fleet and type of vehicles) and vehicle mileage.

What influences fleet management costs?

Fleet management costs are shaped by three main categories of expenses:

•  Vehicle ownership costs include the purchase price, depreciation and financing. Whether a fleet leases or owns its vehicles directly affects how these  costs are structured over time.
•  Operating costs cover the day-to-day expenses of running a fleet — fuel, maintenance, repairs, insurance premiums and driver salaries. These vary based on fleet size, vehicle type and utilization rates.
•  Indirect costs include technology investments such as fleet management software and telematics devices, as well as administrative overhead, licensing fees,  tolls and parking.

 Effective fleet management budgets aim to optimize across all three categories to minimize expenses and maximize operational efficiency.

Should fleets lease or own their vehicles?

The decision to lease or own fleet vehicles significantly impacts overall costs. Each has its pros and cons.

Fleet leasing:

• Offers predictable monthly payments
• Often includes maintenance and insurance
• Can be advantageous for businesses seeking flexibility
• Can help avoid the risk of vehicle depreciation
• May limit customization options long-term
• Potentially leads to higher overall costs, especially if mileage limits are exceeded

Owning the fleet vehicles, on the other hand:

• Provides greater control
• Has a potential for tax benefits
• Includes higher initial costs
• Is more cost-effective in the long-term
• Requires regular maintenance and repairs

What are the main operating costs for a fleet?

Operating costs are the ongoing and variable expenses associated with running a fleet. These costs can vary significantly depending on fleet size, vehicle type and operational requirements. Common operating costs include:

• Maintenance and repair costs associated with routine maintenance, such as oil changes and tire rotations, as well as significant repairs
• Insurance costs, including premiums for both vehicle and liability coverage
• Driver costs, such as salaries, wages, benefits and training expenses
• Technology costs, including fleet management software to track vehicle locations and fuel consumption and telematics device costs
• Office space and administrative costs associated with running the office space, such as utilities and administrative staff costs
• Licensing and permit fees to the government for operating commercial vehicles
• Tolls and parking fees associated with using toll roads and parking facilities

How do fuel costs impact fleet management?

Fleet management fuel costs are a significant operational expense. While there are ways to increase fuel efficiency, such as ensuring that drivers reduce idle time, fuel is, unfortunately, one of the costs associated with all gasoline, diesel or alternative fuel vehicles unless your fleet is considering a move to electric vehicles. 

Transitioning to electric vehicles comes with its own set of advantages. In addition to the obvious environmental impact, choosing EVs also helps reduce operational costs and save money in the long run. Your business will save significant money on fuel and vehicle maintenance. Moreover, there are several government initiatives for businesses that are ready to transition to electric.

How do driver wages affect fleet costs?

Driver wages are a significant component of fleet operating costs. Average driver wages vary widely, depending on factors such as location, experience and the specific role. In many regions, commercial truck drivers, for example, may earn competitive wages, especially with overtime and bonuses. However, it's crucial to balance driver compensation with operational efficiency.

Fleet utilization is a key metric that measures how effectively vehicles are being used. A higher utilization rate can help offset higher driver wages. Companies can implement strategies such as optimizing routes, scheduling, and load planning to improve fleet utilization. By maximizing the time vehicles are on the road and minimizing idle time, businesses can reduce overall labor costs and increase profitability.

How does fleet management software reduce costs?

Telematics plays a direct role in reducing fleet costs and improving efficiency. Industry data supports this — telematics ROI is often realized within the first month. As Juan Cardona, VP Sales at Geotab noted at Fleet LatAm Conference 2021: “Fleet managers could see 15 to 20% savings on their costs, and invest in other safety programs.”

1. Utilize fleet telematics data 

Telematics is changing fleet management by providing real-time data on vehicle location, speed, idle time, etc. This increased visibility enables fleet managers to optimize route planning, reduce fuel consumption and minimize downtime.

One of the most significant benefits of telematics is its ability to help reduce costs. By analyzing data on fuel consumption, maintenance expenses and driver behavior, fleet managers can identify areas for improvement and implement strategies to save money. For example, optimizing routes can reduce fuel costs while encouraging safe driving practices can lower fleet insurance premiums.

2. Monitor driver behavior

Telematics solution provides excellent insights into driver behavior and attitude. These insights help fleet managers observe driver performance and also keep an eye out for collision data. When a vehicle collision occurs, it is important to know why and how and gather essential information for insurance and potential litigation purposes.

Reducing the premium on fleet insurance is a top priority in vehicle fleet management. One way for businesses to qualify for a premium reduction is to install a telematics device in their fleet to monitor each vehicle's trucking statistics.

A fleet tracking device can also detect harsh vehicle use, which impacts its condition over time. Harsh braking, for example, can wear down brake pads, reducing their life. By interceding with driver behavior, you can reduce bad habits that impact the life of certain parts and vehicle systems by replacing parts and providing service less frequently.

3. Schedule maintenance reminders

For a fleet, maintenance can include anything from a simple oil change or air filter replacement to a complete (Department of Transportation) DOT safety inspection. Very often, vehicles are serviced according to the three-month preventative maintenance scheduling, and then there are vehicles that are in the shop every third week. As a fleet manager, managing the predictability of vehicle maintenance helps to avoid unnecessary failures and unpredicted expenses.

By leveraging the details of telematics data, you can identify actual fleet maintenance needs and timing by picking up the actual odometer and/or engine hours off the engine, which is the most reliable source. Additionally, implementing the use of engine diagnostic reporting can help you identify maintenance patterns within certain vehicles, as well as detect and respond to problems early before they lead to costly downtime or potential safety issues.

Increase your fleet efficiency by scheduling maintenance reminders. Here’s how you can do it:

4. Decrease vehicle wear and tear

Decreasing wear and tear by reducing harsh driving improves the vehicle life cycle and the overall condition of these assets. This helps you keep disposal value high, maximizing the actual depreciation and total cost of ownership.

To increase your fleet efficiency, telematics tracking devices generate data that lets you assess your fleet's productivity and help you accurately determine when to increase or decrease your asset portfolio. 

Regularly reviewing distance traveled or customer site visits per day could indicate a need to invest in business growth and/or identify unused assets. Unused vehicles are very expensive to tag, title and insure, so perhaps renting a vehicle for surge times or seasonal usage would be a better business decision.

5. Reduce idle time

An idling vehicle costs at least one gallon of fuel Open in new window per hour. At an average price of $2.50 per gallon, one hour of idling per week adds up to $65 per truck per year — and most fleets are not running just one truck.

Beyond fuel, excessive idling increases engine hours unnecessarily, accelerates wear and tear and drives up maintenance frequency without adding productivity.

Fleets that actively monitor and reduce idling through telematics have cut fuel costs by up to 14% Open in new window. Integrating fleet management into your vehicles will help you monitor and report on idling, allowing you to adjust policies for when a driver should turn off the ignition, and coach drivers to  save you money. 

Geotab's platform helps fleet managers set idling thresholds, alert drivers in real time through GO TALK Open in new window notifications, and integrate fuel card data directly to track savings over time. The unique open platform offered via Geotab Marketplace Open in new window facilitates integrations, helping you manage fuel expenses.

How does telematics help control fleet management costs?

Geotab’s telematics platform gives fleet managers the data they need to reduce fuel costs, extend vehicle life, improve productivity, driver safety and lower total cost of ownership. Understanding the cost of ignoring (COI) fleet inefficiencies is just as important as tracking direct expenses — telematics makes both visible.

 Learn more about optimizing your fleet with Geotab.