Germany's conservatives won Sunday's elections, with their leader Friedrich Merz set to become the next chancellor, followed by the far-right AfD in second place after record gains, according to exit polls.

If confirmed in the final count, the Alternative for Germany (AfD) roughly doubled its score to at least 19.5 percent, boosted by fears over immigration and security after a spate of deadly attacks blamed on asylum seekers.

Merz's CDU/CSU alliance won at least 28.5 percent, said the first exit polls from two public broadcasters, crushing the centre-left Social Democrats (SPD) of the outgoing chancellor, Olaf Scholz, which were looking at around 16 percent.

Merz -- a long-time party rival of ex-chancellor Angela Merkel -- has vowed a crackdown on irregular immigration. He hopes to win back votes from the AfD and halt its rise, which has stunned many in a country still seeking to atone for its dark Nazi history.

Friedrich Merz, leader of Germany's conservative Christian Democratic Union (CDU) is set to become new German Chancellor.

For now, the AfD -- basking in the vocal support of key allies of US President Donald Trump -- is set to stay in opposition. All other parties have vowed to keep it out of power and behind a "firewall" of non-cooperation.

But its jubilant leader Alice Weidel hailed the "historic" result and again said her party was ready to govern with the CDU/CSU.

Before Merz, 69, takes over from the now caretaker chancellor Scholz, he will have to forge a new coalition government in Europe's top economy, an often drawn-out process he has vowed to complete by Easter.

This threatens to leave Berlin paralysed for weeks to come as the Trump administration has forced head-spinning change on the world scene and among European allies, especially over the Ukraine war which has raged for three gruelling years.

"The world out there is not waiting for us and it is not waiting for lengthy coalition talks and negotiations," Merz said after claiming victory, calling for a new government "as quickly as possible".

To build a majority, Merz would be expected to reach out first to the SPD, though without Scholz, who has led Germany's traditional workers' party to a historically poor result.

To gain enough seats, Merz may also reach out to the Greens, who scored at least 12 percent in the exit polls, although the CDU's Bavarian sister party the CSU has so far rejected this.

Much depends on the fate of smaller parties in the complex parliamentary arithmetic of the Bundestag. Several hovered around the five-percent cutoff mark for re-entry into the Bundestag and feared for their survival.

One of them was the liberal and pro-business Free Democrats (FDP), a potential ally for the conservatives to help them gain a majority.

The final balance will also be influenced by how the smaller far-left parties do in the final count. Die Linke appears to be headed for at least 8.5 per cent, while the "left-wing conservative" newcomer BSW is at 4.7 to five percent.

The high-stakes vote in the EU's biggest economy comes amid tectonic upheaval in US-Europe ties sparked by Trump's direct outreach to Russian President Vladimir Putin over their heads to end the Ukraine war.

Across Europe, NATO member states worry about the future of the alliance, nowhere more than in Germany which grew prosperous under the US-led security umbrella.

More threats loom from the United States, long Germany's bedrock ally, if Trump sparks a trade war that could hammer Germany's recession-hit economy.

Once in power, Merz has promised a "strong voice" in Europe at a time of chaotic disruption. 

In his final campaign event in Munich on Saturday, he said the EU needed to walk tall to be able to "sit at the main table" of the world powers.

In a strange twist to the polarised campaign, the AfD has basked in the support lavished on it by Team Trump, billionaire Elon Musk having touted it as the only party to "save Germany".

The AfD, strongest in the ex-communist east, also made gains in western states for its best-ever result after Germany was shocked by a series of high-profile attacks.

In December a car-ramming through a Christmas market crowd killed six people and wounded hundreds, with a Saudi man arrested at the scene.

More deadly attacks followed, both blamed on Afghan asylum seekers: a stabbing spree targeting kindergarten children and another car-ramming attack in Munich.

And on Friday, a Syrian man who police said wanted to "kill Jews" was arrested after a Spanish tourist was stabbed in the neck at Berlin's Holocaust memorial.

Amid the rise of the AfD, Merz has argued that the next government must boldly address their concerns, warning that otherwise the far right might win next time around.

"The stakes could not be higher", argued political analyst and author Michael Broening, who serves on the SPD's Basic Values commission.

"Germany's mainstream parties have consistently failed to convince voters to reject the far right, and this election could be their last chance to turn the tide."

Democratic forces must find solutions to the country's problems, he added. "If Germany's 'establishment' parties fail to deliver this time, they may not be the establishment for much longer".