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Mercedes now have the 'best driver' in Formula 1 after signing Lewis Hamilton, says triple world champion Niki Lauda.

Mercedes have won just one race in the last three years but Lauda - who is also joining the team - expects Hamilton to turn round their fortunes.

"In a bad car he is the best driver in the world because he is unbelievably quick and he makes no compromise," Lauda told Sportsweek on BRadio 5 live.

"Lewis joining is high motivation. They have realised their weaknesses."

Hamilton has dramatically shaken up the 2013 F1 field by joining Mercedes in a three-year deal, ending both his 14-year association with McLaren and Michael Schumacher's comeback with the Silver Arrows.

Lauda, who is also joining Mercedes as a board member, talked through a potential move with Hamilton and tempted the 27-year-old with a chance to succeed where seven-time champion Schumacher failed.

"I was impressed with his approach to things, very pragmatic, no emotions whatsoever," revealed Lauda, who won the world title in 1975, 1977 and 1984.

"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."

Hamilton's move to Mercedes is a risk given the German team's form since returning to the sport in 2010, when they bought Ross Brawn's 2009 championship-winning Brawn Grand Prix team.

Nico Rosberg's victory in China this season is their only win in the last three years, compared to McLaren's 16 wins over that same period. There are still six races still to go in 2012.

Mercedes have sold the move to Hamilton on the basis that they are preparing for a huge push in 2014, when new chassis and engine rules are introduced, but Lauda is confident Hamilton's arrival will also motivate the team to design a more competitive car for 2013.

"When Lewis joins, it's a big change for everybody there," he added. "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 [team principal] Ross [Brawn] 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."