After seeing his Red Bull Racing teammate Mark Webber top the times in yesterday afternoon's free practice session ahead of Ferrari's Fernando Alonso, who had the best times in the morning, the German, who was third quickest, said it was "a good thing" to see the Italian team doing well.
"I think it is a good thing as it shows that all this exhaust talk was a bit useless," the German said.
"I think Ferrari again looks a bit competitive after what we have seen today with both cars."
The runaway leader of this year's title race added that it was difficult to make too many judgements so early in the weekend at a circuit, set in the Eifel mountains, where the weather was infamously capricious.
He said: "McLaren was very difficult to judge if they are back to where they were for the majority of the season, in terms of exhaust and blowing, so we will see.
"They will be quick again tomorrow, so you cannot forget about them. But I think if we can make a step forward then it is worth a lot. We don't know the conditions for tomorrow and Sunday yet.
"Rain is forecast. It is on the way. So, it is a question or when and where it will hit us. Now we need to sit down and see what we can improve, but surely there is room to improve."
Vettel has won six of this year's nine races to date and has an 80-point lead over Webber in the championship standings ahead of tomorrow's 60-lap event around the Nurburgring.