The German ended Ferrari's victory drought by beating Mercedes rival Lewis Hamilton, who had started from pole position, in the Melbourne opener.
It was Ferrari's first win since the 2015 Singapore GP, and ratified its strong pre-season testing form.
But Vettel reckons Ferrari will still have to work very hard to keep up with Mercedes through the season.
"I think Mercedes has to be the favourite," said Vettel in a press conference ahead of the Chinese Grand Prix.
"We had a strong first race but we really go race by race.
"We know we have a good package which puts us in a good place, but we know there are a lot of things we need to do to keep up with them and keep up with the position we are in now to fight for good races.
"The victory is the best medicine for everyone, it is good we did that and we move on."
Hamilton believes there is very little to choose between Mercedes and Ferrari.
"At the end of the day they won the race and did a better job, so we've just got to do a better job," he said.
"But I think it is very close. Pace-wise in qualifying it's very close, in the race he was able to keep up with me.
"There are going to be races where that fluctuates, where perhaps they're ahead and we're behind or we're ahead and they're behind."
Read the full article on eurosport.co.uk: Vettel adamant Mercedes still title favourites