Developed under Paddy Lowe, Aldo Costa, and their Brackley engineering team, the W07 was powered by the Mercedes-Benz PU106C Hybrid, an evolution of the PU106B unit introduced mid-2015. Estimated output was in the range of 950 to 1,000 horsepower, exceeding the competing units from Ferrari, Renault, and Honda. Mercedes described the car's technical advances over the W06 as "mini revolutions" rather than wholesale changes.
In-season developments were extensive: an evolved S-duct improved airflow efficiency along the chassis; L-shaped turning vanes and new front wing fins were introduced in Canada; a bowl-shaped rear wing allowing speeds above 350 kilometres per hour by reducing drag arrived for the Canadian and European rounds; and an innovative transverse hydraulic third-suspension element was trialled in Singapore. Revised brake discs with concave surfaces dissipated heat more efficiently throughout the year.
The car was shaken down at Silverstone on 19 February 2016 and launched online two days later. Pre-season testing at Barcelona covered 6,024 kilometres over eight days. Esteban Ocon and Pascal Wehrlein drove the W07 during in-season test sessions.
Mercedes won all but two of the season's twenty-one races. The Spanish Grand Prix was lost when Hamilton and Rosberg collided on the opening lap, retiring both cars. Red Bull's Max Verstappen won from third on the grid, his maiden Formula One victory. The Monaco Grand Prix pole position went to Red Bull's Daniel Ricciardo due to technical problems affecting both Mercedes drivers in Q3.
The W07 took ten consecutive victories from Monaco through Singapore — one short of the Formula One record held by McLaren from 1988. Hamilton won ten races and Rosberg nine, but their head-to-head battle was fierce. A collision at the Austrian Grand Prix prompted Mercedes to introduce a set of internal "Rules of Engagement" governing on-track combat between the drivers. In Belgium, Hamilton started from the back after taking grid penalties for engine component changes, recovered to third.
Hamilton's engine failed from the lead at the Malaysian Grand Prix, gifting Red Bull a 1-2 and extending Rosberg's championship lead to 23 points with five rounds remaining. At the United States Grand Prix, Hamilton secured his fiftieth career victory — only the third driver in history to reach that milestone. He won in Brazil with a wet-weather masterclass from pole, keeping his title chances alive entering the Abu Dhabi finale.
At Abu Dhabi, Hamilton led from pole and attempted to back Rosberg into the chasing pack to deny him the championship. Mercedes instructed Hamilton repeatedly via radio to increase pace; Hamilton ignored the instructions. He won the race, but Rosberg finished third — enough to claim the championship by five points. Rosberg was crowned 2016 World Drivers' Champion.
Mercedes clinched their third consecutive Constructors' Championship at the Japanese Grand Prix with four races remaining. Their final winning margin over Red Bull was 297 points — the largest gap between first and second in the Constructors' Championship to that point in the sport's history.
The W07's nineteen victories broke the existing record of sixteen wins in a season, held jointly by its two predecessors. Its twenty pole positions set a new single-season record. The car's 90.47 percent win rate placed it third in Formula One history behind the 1988 McLaren MP4/4 (93.75 percent) and the 2023 Red Bull RB19 (95.45 percent). It still holds the records for most podiums in a season (33) and most pole positions in a season as a proportion of races entered (95.2 percent).
The W07 confirmed that the Mercedes hybrid-era advantage was not diminishing into the sport's third year under the new regulations. Rosberg's title was the only one a non-Hamilton driver would claim between 2014 and 2020, and his subsequent retirement left Hamilton as the unchallenged figurehead of the team. The car's engineering foundation — the PU106C power unit and the aerodynamic philosophy of progressive refinement — continued directly into the following season.