Verstappen overtook Hamilton in the final stages of Sunday’s French Grand Prix to extend his lead in the drivers’ standings to 12 points.
And Hamilton warned he and his team needed to find some answers to get his bid for an outright record of eight world titles back on track.
“Those guys are just too quick now,” he said. “They have taken a big step this weekend. We are losing three-and-a-half tenths just on the straights, so I think they have made some sort of improvement.
“We’ve got to figure out whether it’s just rear wing or engine. Either way, we’ve got to improve.”
Hamilton had been given hope of closing the gap in the title race when a rare error from Verstappen at the start allowed him to scythe through.
“If he hadn’t made a mistake in the beginning, the result would have been the same,” added Hamilton. “We are quite slow in a straight line.”
The last man to beat Hamilton to the world title, Nico Rosberg, was critical of his former team-mate for the manner in which he let Verstappen overtake him.
The ex-F1 world champion said: “It was unusual for Lewis – close the damn door. Lewis is normally the best one-to-one racer. I’m surprised he didn’t even try. A bit soft from Lewis somehow.”
Rosberg was with Mercedes at the start of their F1 dominance but warned the tide was turning for his former team.
He added: “They [Red Bull] are really becoming the dominant force and it’s putting so much more pressure on Mercedes, and we’re seeing that Mercedes is making mistake after mistake so they need to be careful and keep it together to have a chance.”