While coalition governments have been studied extensively, there remains a lack of understanding of how coalition preferences emerge and what factors are the most influential. Utilising coalition formation theories, this study posits that voters tend to prefer coalitions with a narrower range of ideological differences between 1.) the parties involved and 2.) between the voter and the party perceived to have the greatest ideological distance from the individual. Previous studies have mainly concentrated on a general left-right ideological dimension or specific issue dimensions, despite the fact that some of the countries analysed are characterized by a two-dimensional political space. Using Germany as a case study that exemplifies this inherent two-dimensionality, this analysis adopts a nuanced approach by employing the calculation of Euclidean distance based on socio-economic and socio-cultural measures. This approach aims to explain the formation of coalition preferences leading up to the federal election in 2021. Our results show how strongly the perceived ideological distance of parties contributes to developing preferences for a specific coalition option, even when controlling for party evaluation and socio-demographics. For this reason, they have important implications for the understanding of the emergence of coalition preferences and party competition.