Voters in Bavaria headed to the polls to decide on the composition of the 180-member parliament on Sunday. The Christian Social Union (CSU) - sister party to Merkel's Christian Democratic Union (CDU) - gained 35.5 percent in Germany's largest and second most populous state, according to an exit poll for broadcaster ARD.
It represents the worst election result since 1950, and a loss of its absolute majority for only the second time since 1962. It means the CSU will now have to form a coalition.
CSU General Secretary Markus Blume has called it a "bitter day for the CSU," while declining to comment on possible coalitions.
Bavaria's Prime Minister Markus Söder of the CSU also said it is "not an easy day." However, he called his party "the strongest party" and added that the most important task is to keep the country stable and governable.
The election can be seen as a blow to Merkel, since her party is not present in Bavaria at all, with the CSU effectively being the Chancellor's 'hand' there. CSU, in turn, is not present in any other federal state.
The preliminary results could indicate a historic loss for the latter. It would only be the second time in its decades-long history that the party has not held an absolute majority of the seats in parliament. The last time Merkel's allies failed to do so was in 2008, when the CSU received about 43 percent of the vote and had to enter a coalition with liberal Free Democratic Party (FDP).
Ahead of the election, AfD MP Petr Bystron told RT that the ruling coalition "is massively losing its people," while the AfD has "a big part of their electorate."
The results are a major drop from the last election in 2013, which saw the CSU win an absolute majority, gaining nine seats in the local parliament, known in Bavaria as the Landtag.
The CSU loss and AFD gain are part of a wider trend happening across Germany, as Merkel has been losing support nationwide. With the breakthrough in Bavaria, the right-wing AfD is now present in 15 out of 16 federal states.
Projections are rolling in for the final outcomes, with Infratest Dimap forecasting that the Greens will place second at 18.5% and the Free Voters will come in third with 11.5%. Trailing behind will be the AfD (11%) and the Social Democrats (10%). In dead last will be the FDP (5%) and the Left Party (3.5%).
The Sunday outcome also could be an early forecast of the upcoming October 28 election in neighboring Hessen, where conservative Volker Bouffier aims to defend the 19 year hold of Merkel's CDU on the governor's office.
Comment: Alternative For Germany seems to have become the voice of Germany's 'deplorables', although the level of anti-immigration sentiment is much higher. The natives are living with the consequences of Merkel's open border policy every day. They have become intensely Eurosceptic, and see no value in bowing to the Atlanticist Empire's orders