Red Bull's Mark Webber set the quickest time in second practice for the German Grand Prix, but was closely followed by Fernando Alonso in his Ferrari.
Only 0.168 seconds separated the Australian and the Spaniard, setting up a tight battle as Red Bull aim to hit back at Silverstone winners Ferrari.
Championship leader Sebastian Vettel was third, with Felipe Massa fourth.
Lewis Hamilton was the highest-placed McLaren in seventh, with team-mate Jenson Button struggling in 11th.
Webber showed no ill-effects from the recent row which followed the team orders instructing him not try to overtake Vettel at the British Grand Prix.
The Australian posted a time of 1 minute 31.711 seconds and appeared to have an advantage over the German, who was told over the radio that he needed to find a couple of tenths in the middle sector to match his team-mate.
"For me, here, it's been 'so far, so good'," said Webber. "The car feels pretty good, Fernando and Seb are really quick as well and you never know with McLaren - whether they might turn up as well tomorrow as we don't know what they have been doing today.
"We have concentrated on ourselves and it was good. [It was] nice it stayed dryish as it's easier to manage from everyone's side, but whatever is thrown at us this weekend we should be ready for it and I am really comfortable."
Vettel, who is looking for his first win at his home grand prix, for once did not seem quite at his imperious best.
But the German crowd did have an unexpected bonus of seeing seven-time champion Michael Schumacher go fifth quickest in his Mercedes.
Ferrari showed excellent pace - just as they had at Silverstone where they clinched their first win of the season - and they look to be in a strong position to mount a serious challenge.
Alonso had topped the timesheets in first practice and was leading in the second session before he found the gravel and later skidded when trying to overtake as Webber just outstripped him.
The 2006 world champion hinted that he might have had an even more productive afternoon had he not been held up by Schumacher and Renault's Vitaly Petrov.
"We were testing different things, we were also testing parameters for temperatures and I tried to pass [Schumacher and Petrov] but maybe they didn't see me so it was some action. It's good because I did a warm-up for the race on Friday."
As for the battle with McLaren, Alonso is keen to show that Ferrari have moved ahead.
"We need to confirm in the next two races that we are quicker than McLaren," he added. "We will see on Saturday in qualifying how quick there are."
The McLarens were disappointing, with Hamilton more than a second behind Webber and Button even further back because of the failure of his one-off test exhaust.
The Britons had expected to be quicker this weekend than in their home Grand Prix after teams decided to revert to pre-Silverstone engine regulations after a row over the aerodynamic use of exhaust gases.
Hamilton admitted: "The fact is we won't find an answer for tomorrow. We're down on downforce - we can't carry the same speed through the corners.
"The car is feeling quite good but we can't go through the corners any faster so we need to refine the set-up to find more downforce.
"The Ferraris and Red Bulls are massively quick. We expect to be just behind them but then in the race anything can happen. But we definitely can't challenge them for pole."
A downbeat Button added: "One to forget. The set-up today, the problems and the failures - yes it's not good.
"This morning I couldn't really get a balance and struggled massively. This afternoon I finally got a good balance with the car and found some rear grip from somewhere and ran on the option tyre and it felt pretty good but all afternoon I haven't had Kers (power boost system) so for us that's a lot of lap time from braking and corner exits.
"It wasn't perfect and then I did one lap on the soft tyre and I had a problem with the exhaust - it's a test part on the car - and it failed.
"It's not so much a new exhaust system but a system that has sensors and what have you. It sometimes happens with these parts and it is disappointing that we didn't get a lot of running.
"We have a lot of work to do on Saturday morning."
Heavy showers and even a hailstorm had hit on Thursday but despite the usual threatening clouds in the Eifel mountains, the teams were able to get through routines undisturbed.
Earlier, it had been a straightforward first practice session but Buemi provided some late drama when he lost control and slid sideways across the track and onto the grass, before briefly being lifted into the air and landing in the gravel.
"That sort of incident really takes the wind out of you," added BBC Radio 5 live F1 analyst Anthony Davidson. "He was lucky not to barrel-roll over.
"He just dipped a wheel onto the dirt and it was very rough out there."