Niki Lauda says the Mercedes has signed the best driver in F1 after inking a deal with Lewis Hamilton for the 2013 season.

Hamilton will replace Michael Schumacher next season after agreeing a deal to partner Nico Rosberg, with the Briton ending a 14-year partnership with McLaren to move to pastures new.

Mercedes hopes that the 27-year-old will be the final piece of the jigsaw when it comes to challenging for wins and Lauda - who himself is to join Mercedes - said he was the best man for the job.

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"In a bad car he is the best driver in the world because he is unbelievably quick and he makes no compromise," he told BBC Radio 5 Live. "Lewis joining is high motivation. They have realised their weaknesses."

Lauda played a role in Hamilton inking his deal to join the Brackley-based team and the three-time champion said he was impressed with the way in which the Briton had handled himself through the discussions.

"I was impressed with his approach to things, very pragmatic, no emotions whatsoever," he said. "The real discussion was 'why should I leave a competitive car where my life is easy in the future?' So my argument was if you're looking for a new challenge then certainly the Mercedes team is one.

"And think of it the other way round, if Schumacher couldn't get the Mercedes team running up front for three years and you next year are doing much better it makes a huge impact on your personality and people will rate you much higher.

"In the end it convinced him that the challenge is what he wants to do. For a competitive guy like Lewis, it's very interesting."

Lauda added that he felt Hamilton and Rosberg would help to get the best from each other on track in 2013, with the pair set to push each other along in the fight for bragging rights.

"When Lewis joins, it's a big change for everybody there," he said. "It's high motivation as they all know that if they don't give him a decent car he will not win. The most important thing now is that Ross and his team realises all the things that are wrong on this car and make a better car next year - the chances are very good. A lot of changes have been done.

"If the car is competitive, and this possible, then he will win races, there is no question about it. The Hamilton effect will push Rosberg to go quicker and Nico will push Hamilton to go quicker and this is all you need in a team."