Toto Wolff says Mercedes is improving, but its W13 silver arrow is still missing "two or three tenths" to battle F1's Red Bull and Ferrari front-runners.
The Brackley squad recovered well in Austria from its disastrous Friday qualifying at the Red Bull Ring where Lewis Hamilton and George Russell both crashed in the session.
But on race day, Hamilton secured his third consecutive podium while Russell finished fourth, one spot behind his teammate.
Wolff was quite pleased with the overall result but conceded that the team would need to unlock a few more tenths before challenging its rivals at the head of the field.
"We're still lacking these two or three tenths in performance," Wolff told the media.
"Overall, the car was much quicker [on Sunday than Saturday], but not quick enough to really challenge at the front."
Porpoising was at the forefront of Mercedes' troubles in the first half of the season, but Wolff thinks the phenomenon is now more or less under control, although track configuration is also helping to mitigate the issue.
But the W13's main deficit is now performance-related according to the Mercedes boss.
"I think it's pure performance," said the Austrian.
"The porpoising, I think we got on top of. I think if we were to go back to Monaco and to Baku, we wouldn't be great, but for sure [we would] not have the problems that we've seen a few weeks ago."
©Mercedes
Wolff said that Mercedes' contenders also experienced a bit of an engine deficit in Austria, a track where the team has always struggled historically.
"It seems like we we're lacking a tiny bit of power here, which we need to assess why, whether it's the altitude," he added.
"Overall, [it] was never a happy track for us in Austria. Predominantly, over the last eight years that we've been successful in the championships, this was the one track where we would struggle.
"[On Saturday], we were really stuck in no man's land, and I think [on Sunday we were] maybe stuck in no man's land from the positioning on the track, but the lap times were at least competitive."
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