Lewis Hamilton believes he has a chance to beat the Red Bulls to German Grand Prix victory but predicts to do so will be "very hard".
Hamilton took pole position for Mercedes ahead of Red Bull drivers Sebastian Vettel and Mark Webber.
Hamilton said: "I anticipate they will both be strong. Of course it will help if we can get into Turn One in the lead and try to hold them behind.
"We have [tyre] degradation issues but I don't think it's impossible."
Hamilton led the British Grand Prix from pole position for the first seven laps last Sunday until suffering a tyre failure, and afterwards said he felt he could have won.
Both Hamilton and Mercedes team boss Ross Brawn admitted on Friday that the Red Bulls looked stronger than the Mercedes when they did their race-simulation runs in second practice.
Hamilton said: "I think it's going to be very hard. The Red Bulls have obviously made a step this weekend. I think a lot of teams have made a step forwards.
"Webber said to me that these tyres seem to work really well on his car so I think perhaps they have had, who knows, potentially they have gained a better advantage than we have by switching tyres. His long run was very strong the other day."
Pirelli have brought a new type of tyre to this race in an attempt to avoid the problems experienced at Silverstone, when six drivers suffered tyre failures during the race. There have been no problems so far this weekend.
Hamilton set the pace in first practice on Friday morning but struggled for pace in the second and third sessions, lagging half a second behind team-mate Nico Rosberg, before a set-up change on his car ahead of qualifying put him back in contention.
The team reverted Hamilton's mechanical set-up to where it had been on Friday morning but changed some of the electronic settings to new ones.
Hamilton said: "The car is obviously, as Nico has showed, great to drive. But trying to get a nice balance is not as easy.
"Nico has been here a long time and is used to the formalities and working with the engineers. For me I'm still finding it a little bit difficult to find my way.
"We were lost. We went from one end of the spectrum to the other and it went from huge understeer to huge oversteer.
"Usually if you don't have it right at the end of P3 you're stuffed. I really thought I was going to struggle to get into the top 10 with the balance I had. We made some big, big changes all round. I went fingers crossed into qualifying and the car felt great from the first lap, something I could really do something with."
He ended up beating Vettel by 0.103secs with the very last lap of qualifying.
Rosberg will start 11th after he failed to progress beyond the second knock-out session because the team underestimated how much other drivers would improve. The German dropped from second to 11th in the last four minutes of the session.
"It's tough, yeah," he said. "It's one of those days in sport that are really horrible so it's very difficult to digest."
Brawn said: "We were obviously very keen to keep two sets of [the faster] 'option' [tyres] for final qualifying, so we only wanted to use one set in Q2.
"To be honest, we thought the time was good enough. It was right at the end and we got caught out by the fact it got a lot quicker at the end of Q2.
"The wind dropped and the track seemed to pick up grip. The cars were going quite a lot quicker and by then we had no time to react.
"We were just biting our nails and we were just one place out, it was a misjudgement."