Exactly this is happening. The CSU (sister party of Merkels CDU in Bavaria and member of the government coalition) has adopted a lot of terminology of the far right, especially when talking about refugees. With the current European trend (Hungary, Poland, now Italy) it has to be seen what will become of Germany.
One silver lining is, that there have always been extremist parties from the right with some success (Republikaner, Ronald Schill), that after some time faded due to internal conflicts and a total lack of any hint of competency. Especially when their voters realized that politics is more than marginalizing the weakest groups in our society.