South African Brad Binder, riding for team Ambrogio Racing, put his customer Mahindra in the fight for the win throughout the 27-lap race, and crossed the line second, just 0.180 seconds behind victor Jack Miller (KTM)
Team Mahindra's Miguel Oliveira had finished third two weeks ago in Assen, the Netherlands.
It was best ever result for a Mahindra Bike, MGP3O, in the championship in which three teams apart from the Indian outfit use Mahindra bikes.
He was sixth after 19 laps but hopes of further improvement were dashed when another rider fell inside him, and knocked him flying.
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There was some compensation for the team, as second rider Arthur Sissis claimed his best result of his first year on the MGP3O, opening his World Championship account with 13th place.
"I am quite angry. It's been a weekend of some very bad luck. Rain in qualifying meant I had a really bad starting position. In the race I fought to the front of the group, and it could have been a good result. To be taken out like that was cruel. Now I have to look forward to the summer break, and coming back stronger," Oliveira said.
The German GP was round nine of 18, and now the MotoGP paddock disperses for the summer break. The second half of the season resumes in Indianapolis on August 10.