The truck leasing and rental market is expected to have a good year in 2024, with a return to a more typical market environment. However, the anticipation of a prebuy ahead of the 2027 emissions regulations is likely to fuel a strong year in 2025. This prebuy, driven by emissions regulations and technological advancements, is increasing demand for renting and leasing new vehicles.
The ongoing freight recession is limiting how many for-hire fleets can rent or lease trucks. With year-over-year freight rate declines, volume decreases, and rising operational costs, fleets are facing financial challenges that make it difficult to make payments reliably. This has led to tighter credit requirements from banks and increased risk for lessors due to potential default.
Private fleets, on the other hand, operate in a less hostile environment than for-hire fleets, which means rental and leasing options for these fleets are not as limited. Many leasing and rental customers are traditionally private fleets and are not as impacted by the cyclical nature of the general freight environment.
Interest in alternative fuel and autonomous vehicle technologies is on the rise, with fleets looking to do pilots to test different equipment and fuels in various markets. Leasing and renting become more attractive in this phase of the evolution to reduce costs associated with fleet electrification.
Beginning in 2027, trucks must comply with some of the most stringent emissions regulations yet. This will require fleets to adopt new equipment to meet the California Air Resources Board’s NOx reduction policies and the U.S. Environmental Protection Agency’s final Phase 3 greenhouse gas emissions standards. While cleaner tractors are achievable, their price will be significantly higher than previous models, with projected cost increases for acquisition and maintenance.
To prepare for the 2027 prebuy, many fleets are looking to secure trucks that comply with current regulations. This may lead to a possible prebuy starting in 2025 and running through 2026, potentially straining supply for new vehicles leading up to 2027. The expectation is that equipment will cost anywhere from $25,000 to $30,000 more in 2027 than it does currently, which may lead to increased demand for trucks before the new emissions standards take effect.
As businesses rush to buy new equipment before the new emissions standards, manufacturers may struggle to produce enough trucks to meet demand. This could result in a situation where leasing and rental companies also face a shortage of vehicles to satisfy customer demand, with 2026 potentially being sold out as early as the first quarter of that year.