What is the right course of action?

Your answer is correct because according to German traffic rules, vehicles coming from the right have the right of way unless otherwise indicated.

In this scenario:
- The red car is approaching from your right, so you must yield to it.
- You then have the right of way over the blue car, which is coming from your left.
- Therefore, you must allow the red car to go first and then proceed ahead, ahead of the blue car.

This rule is known as "right before left" (Rechts vor Links) and applies at intersections without traffic signs or signals regulating priority. Understanding this principle helps in safely navigating priority at such junctions.