Niki Lauda has admitted Mercedes upped its F1 budget in the quest to chase down the sport's top teams.
As the German marque looks set to dominate the 2014 season with a superior 'power unit' for the new era, paddock rumours indicate Mercedes might have spent a staggering EUR 500 million on the development of its turbo V6.
The German newspaper Welt said that figure is wildly wide of the mark, but team chairman Niki Lauda admits Mercedes did make a decision to spend more.
"The budget under the dictate of the RRA (voluntary resource restriction agreement) was the first major stumbling block," said the great Austrian, "because in practice it was not respected.
"The Mercedes executive board understood that we were fighting a losing battle with the resources we had available, because McLaren, Ferrari and Red Bull were not respecting (the RRA limits)," added Niki Lauda.
Welt newspaper claims Mercedes still spends less than Ferrari and Red Bull, but a more even playing field has allowed the Brackley team to step towards the front.
The result is the new car for 2014, the W05, which according to McLaren's Jenson Button is at least a second per lap faster than any rival circulating this weekend in Melbourne for the season opener.
"They're very quick," Button told reporters late on Friday.
"We were two seconds off them in the test and I think everyone's about a second off them here," Button added.
Button said the similarly Mercedes-powered Williams cars are next best, and the Grove team's Valtteri Bottas agrees that Mercedes are all alone at the front.
"Those times that Mercedes did (on Friday) ... it doesn't matter how much fuel they had in the tank, they were really fast," the Finn told Turun Sanomat newspaper.
After a disastrous winter, it appears world champions Red Bull have taken a major step forwards for Melbourne, but team boss Christian Horner thinks there is still "quite a gap" to the front-running "Mercedes and Ferrari" cars.
Force India's Nico Hulkenberg, however, thinks Red Bull is in even better shape than that.
"For me," he is quoted by Speed Week, "Red Bull are (only) behind Mercedes and pretty darn fast.
"It's not a real surprise," said the German, "as Daniel Ricciardo showed in Bahrain that the car is fast when it's working on the track. Now it seems like they're getting their problems under control.
"That should be expected with a team such as that," added Hulkenberg.
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