What is the right thing in this situation?

The sign shows a traffic situation where the road narrows, and it indicates which direction has the right of way. The red arrow pointing up means that you must give way to oncoming traffic (vehicles approaching from the opposite side). This means you have to wait until the oncoming vehicle has passed through the narrow section before you proceed.

Your correct choice, "after the oncoming car has done so," follows this rule. You must let the other vehicle go first because it has priority in this situation.

In summary, when you see this sign with the red arrow pointing upwards and the white arrow pointing downward, you have to yield and wait for oncoming vehicles to pass before continuing. This ensures safe and orderly passage on narrow roads or under bridges.