How do you calculate fleet total cost of ownership?

Fleet total cost of ownership is the sum of what you pay to acquire a vehicle, what you pay to run it, and what you pay to finance it — minus what you get back when you sell it. The formula is short; the work is in being honest about what belongs in it.

A complete calculation has ten line items. Most fleets track the first six and quietly ignore the last four, which is why internal numbers so often come in below reality.

Costs almost everyone counts

• Depreciation — delivered cost including upfit, minus resale value at the end of the service life. Usually the largest or second-largest line.
• Fuel or energy — gallons or kilowatt-hours consumed, at your contract price, escalated over the hold period.
• Repair and preventive maintenance — parts and labor, scheduled and unscheduled. This one grows every year the vehicle ages.
• Tires — tracked separately from maintenance, because tire spend scales with miles while much of maintenance scales with age.
• Insurance — commercial auto premiums, which have risen faster than general inflation for most of the past decade.
• Licensing, registration, permits and taxes — including IFTA, IRP and weight-based fees where they apply.

Costs that get left out — and shouldn't

• Financing charges — interest on a loan, or the finance portion of a lease payment. Only a cash buyer gets to enter zero here.
• Downtime — what an out-of-service vehicle costs in lost revenue and rental replacement. On a service fleet this routinely runs 8–12% of total cost of ownership, and it rises as vehicles age.
• Administration — staff time, compliance, fuel cards, permitting. Real money, rarely allocated per vehicle.
• Telematics and software — per-vehicle subscription costs.

What is a good cost per mile for a fleet?

For most commercial fleets, all-in cost per mile lands between $0.65 and $2.65, depending almost entirely on vehicle class. A compact car used for estimating runs a fraction of what a Class 6 straight truck costs, so a single fleet-wide average is close to meaningless unless your fleet is uniform.

The ranges below are produced by the calculator on this page at its default assumptions — a six-year service life, financing at 8.5% APR, and national average fuel prices. They include every cost category listed above, financing and downtime included.

A few specific vehicles

Utilization moves these numbers more than anything else. Fixed costs — insurance, licensing, administration, most of depreciation — get spread across whatever miles you drive, so a van running 40,000 miles a year has a materially lower cost per mile than the identical van running 15,000. If your cost per mile looks high, check utilization before you blame maintenance.

Repair and tire figures are scaled by duty cycle from the American Transportation Research Institute's An Analysis of the Operational Costs of Trucking (2026 edition), which reports $0.202 per mile for repair and maintenance and $0.051 per mile for tires at the heavy end of the range. Fuel prices are U.S. Energy Information Administration weekly averages: $4.071 per gallon regular gasoline and $5.599 per gallon on-highway diesel, week ending 31 August 2026.

When should you replace a fleet vehicle?

Replace a vehicle when its lifetime cost per mile stops falling. That point is usually six to eight years for a conventional commercial vehicle, and eight to nine years for a battery-electric one.

The logic is a trade between two curves running in opposite directions. Depreciation is front-loaded — a new vehicle loses roughly a fifth of its value in year one — so holding it longer spreads that hit across more miles and pushes cost per mile down. Repairs, tires and downtime run the other way, climbing every year as the vehicle ages. Early on, spreading depreciation wins. Eventually rising repair costs overtake it, and cost per mile starts climbing again.

The bottom of that curve is your economic replacement window. Keep the vehicle past it and every additional mile costs more than it needs to.

Two practical caveats. Shorter cycles almost always need a lease or a credit line to work, because you are absorbing more depreciation per year and buying vehicles more often — which is exactly the trade-off the three-way comparison in the calculator is measuring. And the curve is usually shallow near its bottom: the difference between six and seven years is often a cent or two per mile, so there is no need to disrupt a working replacement schedule over a rounding error.

Should you buy, finance, or lease fleet vehicles?

Paying cash almost always produces the lowest total cost of ownership, because you pay no finance charges. It also produces the worst return on capital, because the money is sitting in depreciating steel instead of in the business. Those are two different questions, and a fleet decision made on only the first one is incomplete.

Here is the same 40-van fleet — Class 2b cargo vans at $49,000 delivered, six-year service life — priced three ways:

Cash wins on total cost by about $459,000 over six years. The lease wins on present value — because it keeps $1.96 million in the business at delivery, and that capital is worth something. At an 8% cost of capital the lease comes out roughly $110,000 ahead in present-value terms, despite costing more on paper.

Which number matters depends on your situation, not on a rule.

Cash makes sense when

• You have capital with no better use and no growth constrained by working capital.
• You hold vehicles well past the term a lender would write.
• Your fleet is small enough that the financing overhead isn't worth it.

Financing makes sense when

• You want to own the vehicle outright at the end and keep it past the term.
• You want depreciation on your own books for tax purposes.
• Your replacement cycle is long — seven years or more.

Leasing makes sense when

• You are growing, and capital deployed in the business earns more than it costs to lease.
• You run a shorter replacement cycle and turn vehicles regularly.
• You want predictable monthly cost and want to protect bank capacity for other things.

What a TRAC lease actually does

A terminal rental adjustment clause lease is the structure most commercial fleets use, and it is worth understanding because it behaves differently from a consumer lease. You and the lessor agree on a residual value up front, and that residual sets your monthly payment — a lower residual means a higher payment. At the end of the term the vehicle is sold, and you receive anything it brings above the agreed residual, or cover the shortfall if it comes in below.

In practice that means you keep the resale upside, the way an owner would, while keeping the vehicle off your balance sheet as a purchase and preserving your cash. It also means ending the lease early is expensive: you owe the unamortized balance, and you do not collect the resale upside. Match the term to your intended service life.

Fleet TCO questions we get asked