Mercedes technical director James Allison has signed a long-term contract extension and believes the team will be a “challenger” in 2024.

Allison, 55, joined Mercedes in 2017 as technical director and helped them to five consecutive constructors’ championships.

Earlier this week, Toto Wolff signed a three-year deal to remain Mercedes’ team principal.

“We are absolutely a challenger rather than a favourite,” said Allison.

“Nevertheless, we hope we have done a good job with the new car,” he added.

Allison said he has a “desire” to keep going in Formula 1 and continuing in his role was “instinctive”.

Mercedes failed to win a grand prix in 2023, their first winless season since 2011.

When asked about Mercedes’ challenge to return to the top, Allison said: “It’s far from unenjoyable, being in that position, as long as the team is collectively confident that it’s making the right moves to try to re-establish itself as a force to be reckoned with.

“I hope that journey upwards is steep and strong and secure but it will be fun trying to drive it at whatever pace we can to give our rivals a good old fight.

“I think Toto drew the comparison between climbing Mount Everest and the challenge we have in front of us and I think that’s a fairly apt comparison.

“Everest is the sternest of challenges but it is nevertheless something that is possible to do.”

Allison believes the announcement of his and Wolff’s contract extensions offered “stability and commitment” to the team.

Looking ahead, Allison said that the grid is “gradually compressing” due to shorter gaps between drivers and he added this trend will likely continue in the new season.

“It’s impossible, at this time of year, to be anything other than apprehensive, coupled with excited and frightened – those are always the emotions you feel,” Allison said.

Wolff praised Allison’s commitment to Mercedes and said he had been a “key ally and sparring partner” for him personally.

“Put simply, he is the most impressive technical leader in our sport,” said Wolff.

“His gladiator spirit, along with his knowledge, experience and determination make him second to none.”

Mercedes won both the drivers’ and constructors’ championships in 2020 but they have failed to reach the same level of success since the new technical rules were introduced two years ago in an attempt to make the field closer.

Allison swapped roles with Mike Elliot in 2021 when Mercedes embarked on a transition period, with Elliot taking over as technical director. They then swapped roles again in April 2023.

The unique car design philosophy for 2022 was significantly different from that of other leading teams and Mercedes found themselves struggling for competitiveness throughout the campaign.

Mercedes have secured only one victory in 45 races since seven-time world champion Lewis Hamilton won the 2021 Saudi Arabian Grand Prix.

They finished second in the constructors’ standings last season but were 451 points behind champions Red Bull, who have dominated in recent years.