Germany Aerospace and Defense Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Germany Aerospace and Defense Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Germany aerospace and defense market is expected to exhibit a growth rate of more than 9% during the forecast period.

Germany's aerospace and defense sectors were negatively impacted by COVID-19. The aircraft manufacturing companies faced a decline in orders as travel bans were imposed in many countries, thus decreasing the growth of the market studied between 2020-21. However, as the situation is getting back to normal, the market has shown signs of recovery.

Germany is one of the leading economies in the European region with a significant share of global military and aerospace expenditure. Germany is home to major defense manufacturers such as Rheinmetall AG, Diehl Stiftung & Co. KG, Krauss-Maffei Wegmann GmbH & Co. KG, etc., which are significantly increasing the development of defense technologies and production rate through national and international investments, collaborations, and partnerships, etc.

According to the IATA, the aviation industry in Germany is expected to grow steadily due to the growth of passenger traffic in the country. To further support the growing passenger traffic and aircraft movements in the country, the government is increasing its investments in the development of airport infrastructure.

Key Market TrendsAn increase in Defense Spending is Expected to Propel the Industry’s Growth

Germany is the third largest spender in Central and Western Europe, after the UK and France, the country spent USD 56.0 billion on its military in 2021, or 1.3 percent of its GDP. Its military spending was 1.4 percent lower compared with 2020. After its formation in December 2021, the new German Government announced its goal of investing 3 percent of Germany’s GDP in diplomacy, development, and defense. Considering the Russian invasion of Ukraine in February 2022, the government stated its intention to increase military spending further in the coming years. It is unclear, however, how this recent pledge will affect Germany’s prior commitments to spending on diplomacy and development.

In addition to, the investments into the procurement of land, air, and sea platforms for armed forces, the country also announced its plans to strengthen its cyber defense technology, under which the government intends to invest in electronic warfare, defense communication, and information sharing technology, cryptology, and network operations, machine learning and artificial intelligence technologies. Such investments to strengthen the land, air, and sea capabilities are expected to propel the growth defense industry in Germany.

Aerospace Industry is Witnessing Increased Investments

Germany is increasing its total investments in national and European space development programs that include technology development for Ariane 6 launcher, ExoMars, and Mars Express programs. The German investments for space programs in 2020 will include USD 180 million for technology development, USD 370 million for telecommunication, USD 94 million for space security and situational awareness, USD 550 million for space transport operations, more than USD 800 million for earth observation, etc. Further, in August 2022, LiveEO, a Berlin-based provider of satellite analytics, secured Euro 19 million in funding, making it one of the largest investments in Earth Observation in Europe. MMC Ventures led the round with Euro 17 million of venture capital and further funds from the European Commission and Investitionsbank Berlin.

Also, to improve air transport in the country, the largest airline in the country, Lufthansa is expanding its fleet of aircraft. With constant plans for expansion, the airline is consistently engaged in the modernization of its long-haul fleet. The newly ordered 20 Boeing 787-9 and 20 additional Airbus A350-900 planes will be delivered to Germany between 2022 and 2027. In addition to this, Germany is a world leader in lightweight engineering technology, and the growing demand for materials such as composites, carbon fiber, etc., from the aviation and satellite manufacturing industry, is expected to drive the market growth.

Competitive Landscape

The German aerospace and defense market is highly fragmented, and there are several companies that support the aerospace and defense industry in the country. Some of the prominent players in the market are Rheinmetall AG, Krauss-Maffei Wegmann GmbH & Co. KG, Thyssenkrupp AG, MBDA Deutschland GmbH, and Leonardo SpA. The large-scale domestic and foreign investments, collaborations and partnerships, policy changes, etc., are further expected to support the domestic manufacturing, engineering, and MRO operations in the country. The international players are also partnering with the government to cater to the defense requirements of the armed forces. For instance, in July 2022, Germany received its first batch of anti-spoofing, anti-jamming military-code GPS equipment, in the first non-U.S. sale of this equipment.

Likewise, ThyssenKrupp Marine Systems (TKMS) is aiming to clinch new orders from the German Navy as the government boosts defense spending in response to the Ukraine war.

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