Historically, the Germans were extremely stingy with any equipment provided to their "allies".
There was nothing like an Axis version of "Lend Lease" ... allies paid in full (and usually a premium, to boot), in advance and got, at best, scraps and leftovers. They generally recognised that German equipment was better than what they had, or could produce, but the Germans and really wanted to buy more ... tanks and planes especially ... but the Germans didn't have enough for their own use, and were extremely reluctant to shortchange themselves to supply their allies, even for cash.
So the fact that Axis allies remain on Level 1 for pretty much everything through the war is quite historical.
The only realistic way I can see of allowing them access to more, higher tech, German, equipment is to allow the Germans to provide the PPs to buy ... whatever ... but, since this would merely circumvent German building limits in ways that, in reality, simply weren't possible, I wouldn't recommend that.
The best I can think of, offhand, is to allow special events to be triggered by *German* actions that will allow them to buy higher tech Armour or Air units for minor allies, representing the Germans shorting themselves ... and then allow the allies to buy replacements for such units once the Germans have paid for them initially (at much higher cost than the Germans would have to pay).
So, say, for every so many VPs (or Victory Cities they occupy) that's historically better than they did at a specific check date, allow them to purchase an upgraded unit for one (or more) allies etc.
(Also, as a matter of historicity, German minor allies shouldn't get any PPs from any cities they capture ... they should all go to the Germans, as was historically the case)
Author, Space Opera (FGU); RBB #1 (FASA); Road to Armageddon; Farm, Forge and Steam; Orbis Mundi; Displaced (PGD)