Honestly, there's no such thing as "over-engineering". There's only "ahead of its time".
So, why just German luxury cars, there exist many different cars that, at the time, looked over-engineered but they eventually become the new normal.
For instance, the first electric car from Tesla looked "too much" for critics. However, now, such cars are becoming the new normal.
Remember, innovation always raise brows.
In addition, what is "over-engineered" is also opinionated, varying from individuals to individuals. If someone hasn’t been exposed much to high-end cars, for them any luxury car would be too much to figure out.
But that said, back to your question…
"What are some examples of "over-engineering" on German luxury cars?"
likely tops in that list of examples. The car is an attempt to make the most perfect and luxury car
. It's grand from every angle. It has two V8 engines and 10 radiators. The engine produces 1000 BHP, which is so powerful that, if not for the fear of tyres wearing out, it can go beyond the top speed 400kmph rather easily. Talking about the tyre, it costs $2,500 per set. (Double that amount and you can actually buy a new car at that price in India.)
But that's not all. Here's the MOST important and interesting (and unbelievable) fact about Bugatti Veyron...
The cost of production of this luxury car is so high and its price so low that whenever Bugatti sells one Veyron, it loses $6 million. (But assumingly, that wouldn’t be a big loss for Bugatti given it also sells the world's most expensive car of all time, La Voiture Noire, which comes at a price of $12.5 million.)
(Courtesy: Business Insider)
Nonetheless. Bugatti Veyron is definitely one car that's "over-engineered" or simply ahead of its time.
(Note: Yes, I know Bugatti is a French company. However, in 1998, Volkswagen AG, a German manufacturer, acquired the rights to use the Bugatti logo and trade name. So, it is indirectly a German company now.)
Hope this answered your question.