What is the right course of action?

You answered correctly! In this situation, you must allow right of way to the red car on your right, because in Germany, at an intersection without signs or signals, the "right before left" rule applies. This means you must let vehicles coming from your right proceed first. At the same time, you have right of way ahead of the blue car, since you are on the blue car’s right side. Remember: when there are no priority signs, always give way to vehicles approaching from your right and expect vehicles on your left to yield to you. This will help you handle similar situations safely in the future.