Seven wins in a row have put Pep Guardiola's side on course to retain the trophy they won with a century of points last season.
Jurgen Klopp's side meanwhile have frittered away a seven-point lead at the top and have looked far from their usual selves since losing their only top-flight game of the season at City in January.
The championship battle pits the Premier League's stingiest defence against the most potent attack and the ex-Reds midfielder and manager gives the edge to the Merseysiders.
"Would I be wrong to think that [City] they're a Ferrari car, whereas Liverpool are more pragmatic - I'm not suggesting a Ford Mondeo, but less of a Ferrari," he said on Sky Sports.
"With a Ferrari a lot more could go wrong. A lot more could go wrong with City's play than with Liverpool.
— Sky Sports Premier League (@SkySportsPL) March 31, 2019
"Liverpool have the best defensive record, don't concede goals, grind results out when they're not going well like they did at Fulham.
"For City they always have to be dominating the ball and on the front foot all the time and creating lots of chances to win games.
"It is an impossible one to call because they're two fabulous teams."
City returned to the top of the table with a comfortable win over relegation-threatened Fulham, with Bernardo Silva and Sergio Aguero both on target at Craven Cottage.
Guardiola's men have not lost since being turned over by Newcastle in January when Rafael Benitez's side prevailed 2-1 at St James' Park.
But what continues to underpin their title charge is their defensive record, which has seen them ship just 18 goals in their 31 games.