Speaking on Sky Sports after the full-time whistle of City's humbling defeat to Tottenham, Neville said: "We've seen City lose the odd game here, but we've very rarely seen them outplayed in every department, but that's what we're watching,' the pundit said. 'They look well short. As short as I've seen them since Pep's first season.
"I've not seen them as bad as this, how they've been in the last few weeks. He will have wanted that international break to come, thinking it would be a reset moment. But now here, it further entrenches the opinion this is a City side currently in decline.
"It seems madness, when you think about what they've achieved. They're easy to play against and teams are encouraged when playing them. The vulnerabilities are clear for everyone to see."
Speaking about the absence of Ballon d'Or winner Rodri through a long-term injury, Neville added: "This is more than just Rodri, far more,' he said. 'When you're on the decline - and I hate to use the word decline, but it does feel like it - it's a group of players with a number of things [going wrong].
"The idea of growing slightly old together, the idea of playing the volume of games together, the physical and mental demands of that, and the third thing is how many times you can keep going. It's a group of players who have run a million miles. They've been sensational. But they've become a little bit punch-drunk. Leggy, lacking in energy, they've lost players and a couple of vital players out through injury.
"It's a big game next week, Liverpool vs City, and there's only a few points in it, there's a long way to go, but it feels like today, if Man City were to win the title this season, I think it would be Pep's greatest Premier League."