German Chancellor Angela Merkel's struggling bid to form a government was hit by a new setback Monday as her key ally was weakened in a leadership tussle.
Horst Seehofer, head of Merkel's Bavarian allies the CSU, will step down as premier of the wealthy southern state in early 2018, leaving the post to regional finance minister Markus Soeder.
Seehofer, 68, intends to stay on as chairman of the Christian Social Union, a less influential post than that of premier of the Alpine state.
The party veteran has held both roles since 2008, but has come under fire after leading his party to a record low score in September's general elections.
"A new chapter is beginning," said Soeder, 50, as he called for unity within the party. "Politics is always teamwork, going alone would achieve nothing."
The leadership change is expected to be approved at the CSU's party congress in mid-December.
Crucially, the party's new leader will be able to shape CSU policy at a time when its supporter base is being eroded by the far-right Alternative for Germany (AfD).
The upheaval comes at a difficult time for Merkel, who badly needs to present a united front with her CDU's Bavarian sister party as she struggles to form her fourth-term government.
She is hoping to open coalition talks with the centre-left Social Democrats after her previous attempt at forming a government with the left-leaning Greens and pro-business FDP fell apart.
Seehofer had been a strident critic of Merkel's liberal refugee policy that allowed more than a million asylum seekers into Germany, but he failed to get Merkel to impose a limit on refugee arrivals.
As a result, Seehofer was blamed by some within the CSU for its record low election score of 38.8 percent (down 10.5 percent from 2013) as the AfD attracted voters angry over the migrant influx.
In the aftermath of the polls, Soeder said he "cannot imagine" signing up to a new coalition contract with Merkel's CDU that did not spell out a limit on refugee numbers.