Germany has been burnt so many times in its history by extreme nationalism that translates to racism. It is so sad to see what is happening to Western governments. Are we going to let Europe explode into warfare over so-called freedoms of expression. This is wrong - so, so wrong.
Germany's history with authoritarianism will keep it from going down that road again, as the German people (not to mention the government) would not (and have not) allowed even a hint of such a regime being allowed. Germany will not ban the party, but it is nonetheless considered with disdain by the majority of Germans. Of greater concern are the nationalist movements in countries like France.
These Neo-Nazis understand that they have to use democratic processes to come into power and hold onto power. I doubt whether the German people will stand for a repeat of history. Having said that, I am eager to see if Merkel gets reelected as that should be an accurate measure of how powerful the Neo-Nazi sympathizers truly are.
A neo-Nazi party won't gain traction, because that is a political system that is a thing of the past. People don't want to repeat the mistakes of the 20th Century. They don't want to see the devastation of life and liberty. Germans can allow free speech without worrying that these fringe groups can go anywhere.