Mercedes boss Toto Wolff believes Red Bull has what it takes to engage the Silver Arrows in a title fight this season after Max Verstappen's victory in the 70th Anniversary Grand Prix.
On softer tyres than last weekend's British Grand Prix and in warmer conditions, Mercedes struggled to make the rubber last.
In contrast, Verstappen had little trouble with tyre degradation on his RB16.
Asked if Mercedes had a credible championship contender in Red Bull, Wolff answered: "I think we have."
"I kind of enjoy the situation because everybody was saying this was going to be a walk in the park for Mercedes, and here we go. That wasn't all a walk in the park.
"We were certainly not the quickest car, maybe not even the second quickest car. We have seen in the past that the hot conditions somehow don't suit our car but it is much more complex than that. I am actually up for the challenge.
"We have, probably, the quickest package. The quickest package also includes the most downforce. The most downforce works the tyres hardest, and in that respect, we have to learn to tune the car to help the tyres to survive a little bit.
Conditions are expected to be warmer again at the Spanish Grand Prix next weekend, and Wolff is excited by the new challenge posed to Mercedes
He added: "I am really curious to see, interested to see how we are going to do in Barcelona. We have a handful of days to understand and there is nothing better than a great challenge."
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