Toto Wolff says he is 'very encouraged' by the progress he has seen from Mercedes in the factory as the team looks to maintain its advantage over the F1 competition in 2016.

The German manufacturer clinched a second F1 world title with relative ease in 2015, the team largely dominating with drivers Lewis Hamilton and Nico Rosberg by winning all but three of the year's 19 races.

Even so, with Mercedes coming up against a renewed threat from a much-improved Ferrari in 2015, Wolff remains wary that the Italian team could experience a similar step forward over the winter that would bring it into line for 2016.

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"Ferrari has made a big step from 2014 and considering the results we think that could well be the case for 2016," he said. "We take the Ferrari competition and threat very seriously. Competition is good and important for F1 for there to be more going on at the front. Ferrari is our best frenemy.

However, Wolff says that by being well aware of the Ferrari's threat means Mercedes is better placed to build on its current advantage, adding that he is 'encouraged' by what he has seen so far.

"I always think that [Ferrari could challenge]," he continued. "It was my thinking last year, it was the thinking of the year before and we have many reasons to be sceptical, so we should do a good job over the winter. What we see from the various departments it is very encouraging, we just have to put it together. The stopwatch never lies and in March we will see if we have done a good enough job or not."

Meanwhile, Red Bull Racing manager Christian Horner feels Mercedes will dominate as comprehensively as it has done over the past two seasons due to the static nature of the technical regulations.