But while Vettel and team mate Kimi Raikkonen finished both sessions fourth and fifth, Hamilton was clear that it was from the Ferraris, rather than the Red Bulls, that he expected the biggest threat to come as the weekend evolved.
But even with the help of marshals in Hockenheim, the vehicle proved too hard to navigate back to the pits and the Briton sank to his knees, devastated at how Q1 had ended having looked so promising.
He then crouched down next to the stricken vehicle after it had been wheeled off the track, resting his helmeted head on the front in apparent shock.
Former teammate Nico Rosberg stunned the team in 2016 when he won the title and then announced his retirement only days later. "This is a huge setback". He trails Ferrari's Sebastian Vettel by eight points after 10 races.
Ferrari appeared to step its game up a level at the British Grand Prix in Silverstone, with Vettel qualifying just 0.044s off Hamilton at a circuit where Mercedes has recently had the strongest vehicle.More news: Chelsea consider shock move to re-sign club legend
"It is great news that I will be racing for Mercedes in 2019 and it is nice to announce it here in Hockenheim - not just the home race for Mercedes but also the circuit where I took my first ever single-seater wins back in 2007", he said.
Hamilton's Mercedes deal makes him Britain's highest paid sportsman.
He is in no position to adopt a No. 1 role in what is a struggling team and after 31 disappointing races his position must be in some doubt. The blow was the latest of several the Briton has suffered this season.
He retired in Austria with a fuel pressure problem, ending a record run of 33 successive races in the points and losing the overall lead.
But what seemed to have drawn fresh controversies from Lewis Hamilton is how Vettel and Ferrari celebrated post race. In Bahrain, he took a five-place grid penalty for an unscheduled gearbox change.
Daniel Ricciardo, a two-time victor this season, is out of contract with Red Bull but Mercedes do not appear to want to risk rocking their stable ship.