Report Overview

Increasingly sophisticated cyber warfare, intensifying geopolitical and trade tensions, and surging budget allocation toward defense sector are expected to boost the growth of Germany Defense Market during the forecast period between 2025 and 2031.

Germany Defense Market - Industry Trends & Forecast Report, 2031

Germany Defense Market size was estimated to be worth USD 32.40 billion in 2024. During the forecast period between 2025 and 2031, Germany Defense Market size is projected to grow at a CAGR of 5.78% reaching a value of USD 48.02 billion by 2031. Major growth factors for Germany Defense Market include intensifying geopolitical tensions across Europe, heightened security concerns, and rising military expenditures. During the first half of 2025, the German Federal Government announced the EUR 649-billion (approximately USD 761-billion) worth of military spending plans during 2025-2030. The total value of the five-year plan will be more than double its usual military spending, primarily due to the country’s aim to meet the NATO’s (the North Atlantic Treaty Organization) newly increased spending target of 3.5% of GDP on defense by 2029. In 2025, the German government allocated EUR 86 billion (approximately USD 101 billion) or 2.4% of GDP to the Bundeswehr (German Federal Defence). The country’s spending plan for defense includes an annual provision of EUR 9 billion (more than USD 10 billion) for Ukraine, fighting the prolonging war with Russia. The significant increase in budgetary allocation for the military spending is expected to boost the growth of players in Germany Defense Market in the coming years.

Source: BlueWeave Consulting

Defense Market – Overview

Defense refers to a nation's military actions aimed at safeguarding its sovereignty, territorial integrity, and national security by countering aggression, subversive activities, and terrorism. Germany Defense Market is witnessing steady growth due to the rising adoption of integrated defense technologies, which combine multiple systems to enhance security capabilities. Advancements in automation and data analytics are driving modernization efforts, improving operational efficiency. The growing need for a highly adaptable and technologically advanced military is fueling demand for modern defense systems to support evolving security requirements.

Germany Defense Market

Growth Drivers

Increasing Military Threat across Regions

Escalating geopolitical tensions across Europe and other regions are boosting the growth of Germany Defense Market at significant CAGR, with countries increasing their military expenditures to enhance security and strategic capabilities. A key example is China, which recently announced a 7.2% rise in its defense budget for 2025, continuing its efforts to modernize its armed forces amid intensifying competition with the Germany. As the world’s second-largest military spender, China aims to strengthen its defense capabilities. Meanwhile, the further spreading of prolonging Russia-Ukraine war reflects broader security concerns and is contributing to a rise in defense investments across the European region. The Germany, meanwhile, continues to lead defense investments. The German Federal Government announced its plans to increase defense spending to 3.5% of the country GDP by 2029. The shift toward larger military budgets is shaping a new defense market cycle, benefiting defense contractors and encouraging advancements in military technology, including unmanned weapon systems and drones, naval fleets, and aerospace and cyber defense. As geopolitical and military power dynamics shift and conflicts persist, defense spending is set to remain a key priority for many nations, driving long-term growth in Germany Defense Market.

Challenges

Increasingly High Cost for Modern and Advance Defense Systems

Rapidly rising costs for development and maintenance of advanced weapons and modern defense systems could significantly restraint the growth of Germany Defense Market. The advanced defense technologies required for modern defense systems, such as next generation aircraft, naval vessels, and cyber defense solutions, demands substantial investments. Additionally, ongoing maintenance and upgrades of existing military assets further strain budgets. These financial burdens could limit the ability of nations to expand or modernize their forces. As a result, high costs could hinder military readiness and slow the adoption of innovative defense technologies, potentially impacting overall growth of Germany Defense Market.

Impact of Escalating Geopolitical Tensions on Germany Defense Market

Escalating geopolitical tensions, particularly prolonging and further spread of  Russia-Ukraine war could significantly impact Germany Defense Market by driving increased defense spending as nations prioritize military preparedness. Heightened conflicts and regional instability push countries to enhance their defense capabilities, leading to larger defense budgets and investments in advanced defense technologies. This surge in demand for military equipment, such as aircraft, weapons systems, and cybersecurity solutions, fuels the growth of Germany Defense Market. Additionally, geopolitical uncertainty accelerates arms race dynamics and fosters strategic partnerships, further expanding the defense market. However, it also creates challenges, including rising competition, and the need for rapid innovations to address emerging security threats.

Germany Defense Market

Segmental Coverage

Germany Defense Market – By Armed Forces

Germany Defense Market by armed forces is segmented into Air Force, Army, and Navy segments. The air force segment holds the largest share of Germany Defense Market by armed forces. The modernization of aircraft capabilities in Germany is expected to drive significant growth in the Air Force segment. The naval segment, followed by Air Force segment, holds a significant market share in Germany Defense Market by armed forces.

Source: BlueWeave Consulting

Germany Defense Market – By Product Type

On the basis of product type, Germany Defense Market is divided into Fixed Wing Aircraft, Rotorcraft, Naval Vessels,  and Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) Systems; Weapons & Ammunition; Protection & Training Equipment; and Unmanned Aerial Vehicles (UAVs) segments. The fixed wing aircraft segment is further divided into fighter jets and transport aircraft. The rotor craft segment consists of helicopters. The ground vehicles segment, on the other hand, included tanks and armored fighting vehicles. The naval vessels segment, comprising aircraft carriers, submarines, and destroyers subsegments, accounts for the largest share of Germany Defense Market by product type. The German Navy, a pivotal aspect of the country’s defense, safeguards maritime interests with a diverse fleet including 62 navy and auxiliary vessels, and 51 aircraft. Its core mission is protecting maritime borders, detecting threats, and maintaining security in both peace and war. Rising defense spending spurs demand for the advanced vessels.

 Germany Defense Market – By Operation

Based on operation, Germany Defense Market is bifurcated into Autonomous Defense Equipment and Manual segments. Germany, like other major countries across the world, is rapidly adopting unmanned systems, such as unmanned aerial vehicles (UAVs), unmanned combat vehicles, and autonomous drones, for various military applications, such as surveillance, reconnaissance, search and rescue operations, and tactical missions. Unmanned systems are equipped with advanced sensors, 360-degree situational awareness capabilities, and autonomous technologies, enabling them to operate remotely or make autonomous decisions without human intervention. It enhances operational efficiency, reduces risk to personnel, and improves mission outcomes. The surging demand for unmanned systems is also reflected by advancements in commercial and civilian sectors, where drones are used for purposes ranging from agriculture and delivery to infrastructure inspection. As research and innovations in unmanned systems continue to evolve, these technologies offer an expanding array of applications and further fuel the growth of unmanned systems in Germany Defense Market.

Competitive Landscape

Germany Defense Market is highly competitive, as a number of companies are competing to gain a significant market share. Key players in the market include Airbus Defence and Space, Diehl Defence GmbH & Co. KG, Hensoldt AG, Jenoptik AG, KNDS Deutschland (Krauss-Maffei Wegmann), MBDA Deutschland GmbH, MTU Aero Engines AG, OHB SE, Rheinmetall AG, and ThyssenKrupp Marine Systems (TKMS). To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In September 2025 – Rheinmetall AG announced its plan to acquire Blohm+Voss shipyards, a Germany-based shipbuilding and engineering company.

• In February 2024 - Rheinmetall Defence Australia won EUR 2-5 billion contract for 123 Boxer Heavy Weapon Carrier vehicles for the German Army. The deliveries are planned to begin 2025.

Scope of the Report

By Armed Forces

• Airforce

• Army

• Naval

By Product Type

• Fixed Wing Aircraft

  • Fighter Jets

  • Transport Aircraft

• Rotorcraft

  • Helicopters

• Ground Vehicles

  • Tanks

  • Armored Fighting Vehicles

• Naval Vessels

  • Aircraft Carriers

  • Submarines

  • Destroyers

• Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) Systems

• Weapons & Ammunition

• Protection & Training Equipment

• Unmanned Aerial Vehicles (UAVs)

By Operation

• Autonomous Defense Equipment

• Manual