Toto Wolff feels that Mercedes need to find "two or three tenths" to put themselves in contention at the front of the field.
The team showed good pace on the opening day of the Austrian Grand Prix weekend, but suffered a setback when both Lewis Hamilton and George Russell crashed out of Q3 in Friday's qualifying.
This compromised the Silver Arrows going into Saturday, yet both drivers were still able to score points in the Sprint, and this continued into Sunday's race, with Hamilton claiming a podium in third while Russell finished in P4.
Wolff admits that he was "quite pleased" with the end result, but acknowledges that there is still work to do.
"We're still lacking these two or three tenths in performance," Wolff told media, including RacingNews365.com.
"Overall, the car was much quicker [on Sunday than Saturday], but not quick enough to really challenge at the front."
Issues now about performance, not porpoising
Mercedes struggled with porpoising on the W13 for much of the early stages of the season.
Wolff thinks that this is no longer an issue, though, and that the extra tenths the team need to make up are down solely to performance.
"I think it's pure performance," the team boss explained.
"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."
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Austria never a "happy track" for Mercedes
In terms of engine performance, Wolff admits that the team need to gather more understanding of the slight issue they faced at the Red Bull Ring.
"It seems like we're lacking a tiny bit of power here, which we need to assess why, whether it's the altitude," he added.
However, the Austrian also acknowledges that his home track has never been a favourable one for Mercedes.
"Overall, [it] was never a happy track for us in Austria," the Team Principal continued.
"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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