In the early stages of the season, the Honda engine has looked a solid package and if the Australian Grand Prix is anything to go by, then Red Bull could be expected to challenge more competitively with the likes of Mercedes and Ferrari this season.
Verstappen finished third on Sunday, and performed an excellent overtaking move on Vettel on the run down to Turn 3 on lap 31 and Wolff believes that move alone from the 21-year-old, indicates the amount of power that Red Bull now have.
"We saw how they've eaten up Sebastian into Turn 3," Wolff said on Honda's power to Motorsport.com. "Power was enormous, and seeing them come back strong makes me happy because it's a good group or people and they're really decent men.
"The combination with Red Bull will certainly become a threat. The level of performance is such that you must certainly have them in the calculation for the championship."
Despite the Red Bull-Honda partnership potentially causing Mercedes some issues this season, Wolff explained that he is pleased for the Japanese manufacturer after a difficult spell with McLaren a couple of seasons ago.
"It's the first podium since their return and they deserve it," the Austrian continued. "They went through some really tough times and seeing the Honda on the podium and seeing the happy guys is great."