Dortmund comfortably retained their Bundesliga title last season after picking up a record 81 points, finishing eight clear of runners-up Bayern.
Failure to win Germany's top flight two seasons in a row has since seen Juup Heynckes reinforce his squad heavily this summer, with the Bavarian outfit having already signed the likes of Xherdan Shaqiri, Claudio Pizarro, Mario Mandzukic, Dante and Tom Starke.
And while Subotic admits winning a third straight league title will be Dortmund's toughest challenge to date, he is getting too afraid of the threat the Munich side will pose.
"We are not afraid of Bayern, but we will respect them," the Serbia international told Bild.
"We know that it will be the most difficult season for us. It is the first time we have proclaimed the goal of qualifying for the Champions League as our main target."
Many have tipped Schalke and Borussia Monchengladbach to pose a threat as well, and Subotic agrees it will be far from a two-horse race in the coming campaign.
"Gladbach have just got a striker [Luuk de Jong from Twente] for €15million and Wolfsburg and [Werder] Bremen have also strengthened," he continued.
"I think there are at least eight teams who want to compete with us."
Dortmund will have to do without Shinji Kagawa this season after the Japanese star left for Manchester United, but Subotic has no doubt his side currently have enough firepower up front.
"Shinji has earned his contract with Manchester United through superior performances," he added. "But we have an extremely strong team.
"Marco Reus and Mario Gotze are world class."
Apart from Reus, BVB coach Jurgen Klopp has also sealed the signings of German-Brazilian youngster Leonardo Bittencourt and former Stuttgart forward Julien Schieber.