Yes, Germans still say "Auf Wiedersehen" but its usage has become more formal and less frequent in casual daily life than it was decades ago. It literally means "Until seeing again" and is pronounced "owf vee-der-zay-en." You will still hear it regularly in formal contexts, in shops, in business meetings, on the phone, in hotels, and when speaking to older people or strangers where politeness matters. For example, a shop assistant might say "Auf Wiedersehen und einen schönen Tag noch" when you leave. However, among friends, young people, and in informal settings, Germans are much more likely to say "Tschüss" which is like "bye," or "Ciao," borrowed from Italian, or "Bis bald" meaning "see you soon," "Bis später" meaning "see you later," or "Mach's gut" meaning "take care." In southern Germany and Austria, "Servus" or "Ade" are common. On the phone, "Auf Wiederhören" is used instead because you hear but don't see each other. So while "Auf Wiedersehen" is not outdated or wrong, it sounds formal and a bit old-fashioned in casual conversation, and learners should know both the formal and informal options to match the situation.
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