Fernando Alonso admitted Ferrari were not fast enough to challenge for the front rows of the grid after qualifying eighth on Saturday for the German Grand Prix.
And he added that he did not think the team had gambled by opting to run on medium tyres in the session to give them a different strategy to the cars around them in Sunday's race.
He said: "I think we did a step forward -- we are more competitive than we were at Silverstone, where we were 1.5 seconds off the pace, in practice and Q1 and Q2. That was not the case today.
"So definitely the team did a step forward and we've come back to a more reasonable level of competitiveness. We need to improve, yes. No questions about that, but this is a step.
"We were not the quickest before, especially on Saturdays. We are not the quickest now obviously, but we are more confident and optimistic for tomorrow because the car is performing more in a normal way."
He added: "When they pushed in Q3, we saw 1:29.3s, which is for us a little bit too fast!
"So more or less as expected, we knew with the soft maybe we could qualify fifth or sixth, with the medium seventh or eighth. And in terms of strategies, it is not clear which will be best. Tomorrow we'll find out.
"Whatever tyre you have, if you are fast you will be on the podium or win the race, if you are not fast, with whatever the tyre, you will not be in the points. So it is about the pace tomorrow - not the tyres or the strategy."