Pep Guardiola admitted Manchester City were outplayed by an inspired Manchester United in a 2-0 defeat that further dented their Premier League title challenge on Saturday.
City are still yet to win in four league games this year to fall six points adrift of Arsenal, who have a game in hand away at Nottingham Forest later on Saturday.
The scoreline at Old Trafford could have been much more embarrassing for Guardiola's men as United turned in arguably their best performance of the season in Michael Carrick's first game in charge.
Bryan Mbeumo and Patrick Dorgu struck for the Red Devils, who also had three goals disallowed for marginal offside calls.
"The better team won," said Guardiola. "We weren't at the level required to win this game.
"In many departments, we weren't there. They were better. They had an energy we didn't have."
Pep and Rodri's reaction to the derby 💬 pic.twitter.com/It5LLhmfvX
— Manchester City (@ManCity) January 17, 2026
The course of the game could have been different had Diogo Dalot been sent-off inside the opening 10 minutes for catching Jeremy Doku on the knee with his studs.
Dalot escaped with a yellow card, but Guardiola said his side could not use that decision as an excuse.
"Was it a red card? Yes. But it would be poor for me as a manager to blame the red card," added Guardiola.
"Would it have changed the game? Who knows. If the players have that as an excuse, then we have a big problem."