It had been dubbed a stop on “Angela Merkel’s farewell tour” by the far-right, who promised to give the German chancellor a “good send off” when she visited Chemnitz on Friday.

Benjamin Jahn Zschocke, of the rightwing movement Pro Chemnitz, said: “We will use the opportunity to celebrate her departure and of course we see it partly as our success.”

Merkel was making her first visit to the eastern city since the killing three months ago of a German-Cuban man, allegedly by two refugees from Syria and Iraq. The attack sparked riots and revenge strikes on foreigners in the city. This earned Chemnitz a reputation as a hotbed of far-right aggression and put new wind in the sails of critics of Merkel’s refugee policy, under which more than 1.2 million migrants have come to Germany over the past three years.

The visit also came two weeks after Merkel announced she would step down as leader of the Christian Democratic Union. She also said she would not stand for re-election as chancellor, a move that triggered a muted sense of triumph among those who have been calling for her to go for years.

Right-wing protesters hold a banner during a demonstration against Merkel in Chemnitz. Photograph: Anadolu Agency/Getty Images

After meeting a local basketball team in the morning, the chancellor spoke at a debate with readers of the Chemnitz Freie Presse newspaper. Outside, a group of between 1,000 and 1,200 protesters, according to police estimates, chanted “Merkel Muss Weg” (Merkel must go) and carried placards bearing the same message. Some waved flags reminiscent of the Nazi era that depicted black Euro symbols on a red background. A handful of demonstrators, asked for interviews by media, chanted “Lugenpresse” (lying press) – a phrase commonly used during the Nazi era.

Thousands of police officers kept the far-right protesters apart from counter-demonstrators belonging to the Bundnis Nazifrei (Nazi Free Alliance).

“It’s high time this old cow was shown the door,” said one anti-Merkel protester, who refused to give her name. A man accompanying her, who called himself Björn, said: “In an ideal world she would appear in front of a court to answer for her crimes.”

Jahn Zschocke denied accusations that Pro Chemnitz, a small but effective group that has been compared by observers to the US “alt-right” movement, has mobilised far-right demonstrators across Germany in recent weeks. He said: “We have only channelled the frustration and anger.”

That frustration and anger focuses mainly on fears over security, particularly reports of women allegedly being verbally harassed and groped by groups of young Muslim men.

Masoud Hashemi felt the full force of such anger one night in October when he was closing his restaurant Safran. He said that three men clad in motorcycle helmets and black masks stormed the building and smeared a swastika on the window. “One of them shouted ‘Heil Hitler’ and the other threw a samovar at my head,” he recalled. The former Iranian journalist, who fled to Germany for political reasons five years ago, spent a week in hospital and is still recovering from his injuries.

Benjamin Jahn-Zschocke, spokesman for Pro Chemnitz, said the far-right group is channelling citizens’ anger and frustration. Photograph: Sean Gallup/Getty Images

“Ninety per cent of people in this city are good,” he said. “The rest are to be feared.” He added that since the attack the police drive past at least 10 times a day.

A Jewish restaurant has also been attacked and a Turkish restaurant in the basement of a tower block was burned to the ground.

Shaparak Ghanbari said every morning she fears what she will find when she opens her Persian restaurant Schmetterling – the German word for her first name, which means butterfly – after the front glass window pane was broken by neo-Nazi demonstrators at the end of August.

“Our friends and family say: ‘why don’t you leave?’” said Ghanbari, who is from Tehran. Her Christian family escaped persecution in 2015 and arrived with a large number of refugees in the summer. “But we’ve invested €45,000 in this place. We’ve tried hard to integrate, learning the language and making friends with Germans. And where would we go?”

During Merkel’s visit, when her cavalcade passed the protesters at considerable speed, they shouted “clear off”, “traitor” and “this is our country”. Protest organisers accused the police of deliberately downplaying the number of participants, estimating there had been 1,200 rather than up to 550.

Chemnitz Freie Presse pointed out that Merkel’s visit was in stark contrast to the last time she was in the city in 2002, when she embarked on a “gentle walkabout in the market square”.

Shaparak Ghanbari, owner of Persian restaurant Schmetterling, said it has been targeted by neo-Nazis. Photograph: Kate Connolly/The Guardian

Even in the theatre, the subject of Merkel is not far away. In the Chemnitzer Kabarett on Thursday night, performers satirised the political concerns of daily life, with topics ranging from fake news to fertiliser. In one skit, set in 2025 – when the city will become Europe’s cultural capital – they conjured a scenario in which Merkel is still in power and is allowed to stay in post for the rest of her life. At that point the audience groaned and laughed. “And beyond the grave,” the cabaretist added after a pause, which prompted even louder groans.

Spilling out onto the streets afterwards, theatregoers such as Janet Wolf reflected on the city’s polarised state. “We understand Merkel has bigger fish to fry but it really was high time she came to hear what the people of Chemnitz feel, and we appreciate she’s finally here,” said Wolf.

Annett, a retired nurse who declined to give her surname, said: “To be honest I don’t know what she thinks she’s doing here so long after the attack. She will not find any ounce of affection here, and she’s on her way out anyway, so it seems rather masochistic.”

During Friday’s newspaper debate, Merkel again defended her decision to allow refugees into Germany, while accepting the shortfalls of the approach. She also appealed to Chemnitz citizens to show more tolerance towards people from different cultural backgrounds.

Asked what she would say to the demonstrators outside the auditorium, she replied: “I’m ready to talk to them … but we have some protesters today with whom one can’t talk.”