Sure, you can construct arbitrary new words in German. That works. However, that is certainly not the spirit of the game. Which the game does make abundantly clear in a quite long section of the rules. (I just got the game and its rules from our board game shelves, used the new OCR feature in iOS to copy and paste the relevant text into DeepL, cleaned up the translation and am now pasting it here with my own annotations in brackets. That was a cool experience.)
Excerpt from the rules:
Compound words
German is notorious worldwide for its compound words. There are two ways to form such in German. „Tischdecke” (tablecloth) is one word. „Mehrzweck-Fräsvorsatz“ (multi purpose milling fixture) is in principle also a word, because the hyphen merely serves to make it easier to read. „Rindfleischetikettierungsüberwachungsaufgabenübertragungsgesetz“ (beef labeling monitoring tasks transfer law) actually used to be a real (and awful) word, which probably would have been a little easier to read with a few hyphens. (We won't discuss the bad habit of breaking up compound words in German with – incorrect – spaces here). Strictly speaking, then, all such words can be valid clues, but only if they correspond to actual usage. It is easy in German to simply invent composites: „Tentakeltrabant“ (tentacle satellite) would theoretically be a great clue for „Oktopus” (octopus), „Mond“ (moon), and „Auto“ (car, because of the East German car „Trabant”), for example, but since it's only a word creation that you can't find in any dictionary, you can't use it.
Prefixes
This actually belongs to the previous rule, but should be mentioned explicitly: Simply turning a word into its opposite by putting a syllable like „kein-“, „nicht-“ or „un-“ (non-, un-) in front of it should only be allowed if this word is colloquially used. „Unlebendig“ (unalive) is therefore not a permitted clue for „Tod“ (death), „untot“ (undead) on the other hand would be permitted as a clue for „Skelett“ (skeleton).
With the literal English translation of flying mouse man.
Apparently the word fledermaus originates 1200 years ago and is derived from “flattern” (to flutter).
If you come up with a word and you aren't sure if it exists check if it is in the dictionary or if Google knows it.
So no making up words like
Mixerversicherungsfahrzeug