The reigning Premier League champions are in free-fall, having won just one of their last 11 matches in all competitions.
Of those fixtures, eight have ended in defeat as City fall behind in the title race and their bid for Champions League glory.
And Guardiola has now claimed his side 'does not have the players' to win either competition this season.
Speaking to TNT Sports, the former Barcelona and Bayern Munich boss was asked if he thinks it is still possible for City to challenge for either trophy.
As he shook his head, Guardiola bluntly replied: "No."
READ MORE MAN CITY NEWS
'Billion pound bottle job' is Chelsea's most important player - not Cole Palmer
Man City dealt new injury blow amid worst-ever form ahead of Aston Villa trip
He continued: "We don't have the players.
"It's more difficult. I don't have the feeling now. Maybe it's going to happen, who knows?
"But I have the feeling that now we have to think in the short term. We cannot put a lot of big, big targets.
"When you want to achieve something important, like win the Premier League, arrive in the latter stages of the Champions League, how you have to behave is this one concept: consistency. All this time we were incredibly consistent and now we are not."
Most read in Football
Jadon Sancho sides with Ian Wright in passionate rant about Marcus Rashford
EFL consider introducing VAR but it would look radically different to Premier League
Is Matheus Cunha banned against Leicester? Vitor Pereira unable to provide update star
Roberto Firmino placed on transfer list and Jose Mourinho could offer Saudi escape route
City's uncharacteristic drop in form has seen them knocked out of the Carabao Cup in another blow to their trophy ambitions.
Meanwhile, they have dropped to fifth in the Premier League, nine points behind leaders Liverpool.
As for their Champions League campaign, one point from their last three matches leaves City 22nd in the standings with two games remaining.
Any further slip ups could see the 2023 winners fail to reach the knockout stage for the first time in 12 years.
Guardiola has won 18 trophies during his tenure at the Etihad Stadium, including a treble two seasons ago.
He has also won six league titles, with last term's an historic fourth in a row.
The former Barcelona manager committed his future to City last month, penning a new deal through to 2027.
Simon Jordan calls Kyle Walker's antics during Manchester derby 'preposterous'
City have picked up just four points from a possible 15 since, though.
Guardiola will be hoping to kickstart a turnaround at Villa Park on Saturday ahead of the busy festive period.