Why Red spots in the outer groin area on a German shepherd?

The spots are probably dermatitis, which is a generic term for inflammation of the skin. Unfortunately, from the description "blotchy red spot around the groin", there isn't much hope for figuring out the cause of the dermatitis. Some of the more common causes include Allergies, fleas or other external parasites or a skin infection. You will need to take your dog to your vet to figure out what is causing the red spots.