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The two-time World Rally champion has tested the Red Bull Buggy run by Philippe Gache's team twice now and he believes the car has the potential to win the marathon January event.
"I have done one week testing in Morocco," Sainz told AUTOSPORT, "and more recently another four days.
"The Buggy is very good and we have prepared well for a small team."
Sainz said he will not know his chances of winning the event until it starts and he has an idea of the route through South America in January.
"The Buggy goes very well off-road," the 2010 Dakar winner said. "It is on the roads where we have been struggling, but we have done some more work and I have a good feeling with this car.
"Of course another big aspect for winning the Dakar is reliability and we have good reliability with the Buggy.
"But the big question about whether we can win is whether we can beat the Mini - and we know that the Mini has not been standing still."
Next year's Dakar starts from Rosario in Argentina on January 5 and finishes in Valparaiso, Chile 13 days later, having travelled close to 6,000 miles through the Andes and into Bolivia.
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