Mercedes team boss Toto Wolff claims Ferrari are now Formula One title favourites following their impressive start to the 2017 season.
Sebastian Vettel's victory in Monaco last time out lifted the four-time world champion 25 points clear of Lewis Hamilton in the drivers' standings, while Ferrari also lead the way in the constructors' championship after six races, with a 17-point advantage over Mercedes.
"It's painful, but we are not the favourites for this year's championship," said Wolff. "At the moment, it's Ferrari.
"They have a very strong package and we need to rise to the challenge to prove once again that we are the team to beat.
"This is the reality of the situation now. We have to fight with all that we are worth for every single win, pole position, podium finish and every point. You can no longer expect that when you look at a timesheet the two Mercedes will be right at the top.
"Everybody at the factories is working absolutely flat out to assess the current difficulties we are facing - to define our objectives, work with the data we have and then come up with the right solutions.
"Some of these fixes will be short term, others may take longer. We've had bruising weekends before and it's about showing resilience and getting up after falling."
Mercedes dominated F1 for three years prior to the regulation changes that were introduced for this season, Hamilton winning successive world titles before Nico Rosberg triumphed in 2016.
Nevertheless, Wolff was still able to highlight recent examples where his team have bounced back from adversity.
"I remember the troubles we had in Singapore in 2015, which hurt badly," he added. "We gave ourselves a deadline to address that setback before switching our focus to the next race in Suzuka, which we won.
"We've done exactly the same thing after Monaco - addressing the problems before turning our attention to [this weekend's Canadian Grand Prix in] Montreal.
"We know that this season is a marathon, not a sprint."