What is the right course of action?

Your answer is fully correct. According to German traffic rules, you must allow the red car to pass first, because it is on a priority road indicated by the yellow diamond sign. The blue truck is coming from a side road and does not have priority. Therefore, you may proceed before the blue truck once the red car has passed.

The priority road sign means vehicles on this road have the right of way, so you must let the red car go first. Since you are on the priority road too, you can continue before the blue truck, which is on a non-priority side road.

Understanding priority signs and road layouts is crucial. The yellow diamond indicates priority road, so vehicles on this road have right of way over vehicles entering from side roads. This is why you yield to the red car but not to the blue truck in this situation.