MONTREAL, Canada -- Mercedes estimates it was losing 0.6s of lap time to Ferrari on the straights alone during qualifying for the Canadian Grand Prix.

Sebastian Vettel beat Lewis Hamilton to pole position by 0.206s in Montreal on Sunday, giving Ferrari its first P1 grid position since the Bahrain Grand Prix in April.

The Italian team has had a straight-line speed advantage all season and entered the Canadian Grand Prix as favourites thanks to the high-speed layout of the Montreal circuit. But Mercedes came to Canada armed with its latest engine upgrade as well as a distinct advantage in slow-speed corners and in the final moments of qualifying Hamilton looked as though he might snatch pole from Vettel.

After the first two sectors of the lap, the Mercedes was 0.092s ahead of the Ferrari, but on the following long straight -- which makes up the majority of sector three -- Vettel pulled a 0.298s advantage to turn the tables.

Sebastian Vettel took pole position with help from Ferrari's significant straight-line speed advantage. Peter J Fox/Getty Images

Asked if he was surprised by Ferrari's advantage on Saturday, Mercedes team boss Toto Wolff said: "They were very good here last year already and we knew the straight-line speed was going to be very difficult to defend against. To summarise today, we were losing 0.6s on the straight and trying to make it up in the corners but 0.4s was not enough."

Although straight-line speed advantage is a mix of drag levels and engine power, both teams came to Montreal with power unit hardware upgrades. Ferrari had updates to its turbocharger and MGU-H, while Mercedes' upgrade was a wholesale replacement of the internal combustion engine, turbo and MGU-H.

Mercedes had the added concern of one of its customer engines -- in the back of Lance Stroll's Racing Point -- blowing up in the final practice session before qualifying.

Without an explanation for the failure on Saturday night, Wolff said Mercedes was "not happy" to lose one of its updated engines but said it had no impact on the way his team ran its power units in qualifying.

"I think it came as a surprise to us but we have been running those engines on the dynos and still believe what we have seen on the dynos counts," he said. "You can't turn them down or run them differently because of fear of failure because that is very difficult to judge. So that will not change how we run the engine."