Jayden Schaper and Hennie du Plessis led the bid for a seventh South African win on the DP World Tour this season after taking the joint lead on Thursday.
The pair shot eight-under 64s at Golfclub Munchen Eichenried to lead by one from compatriot JC Ritchie and the Brisbane-based Quayle.
Schaper, who won back-to-back in his homeland in December, did not drop a shot in carding eight birdies while an eagle three was the highlight of Du Plessis' blemish-free round.
Four Englishmen – Ross Fisher, Paul Waring, Joe Dean and Dan Bradbury – and Scot Daniel Young shot 66 to join a large group in joint-fifth on six under.
Another Englishman, Marco Penge, in his first start since May's US PGA due to ongoing issues with a viral infection, was four under.
Germany's two-time major winner Martin Kaymer could only manage a level-par 72, as could Race to Dubai leader Patrick Reed, with another former Masters champion, Sergio Garcia, one better.
The Spaniard, who missed out on a place at The Open in Tuesday's final qualifying after being taken ill in his second round, was four over through seven holes after two bogeys and a double but bounced back with five birdies.
Other Australians were well down the leaderboard. Jason Scrivener carded a two-under 70, six shots off the leading pair, with David Micheluzzi a further two shots back. Connor McKinney was two over with Ryan Peake finishing five over.
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