This is the 10th straight season in which City have qualified for the Champions League, after what was their third successive exit at the last-eight stage - having previously being knocked out by Liverpool and Tottenham - under manager Pep Guardiola.
City spurned a series of chances before a Moussa Dembele goal handed Lyon a surprise 2-1 victory in Portugal - with Guardiola's negative tactics and decision to start Eric Garcia criticised in the aftermath.
'It was a tough moment, ' Guardiola said. "How the club and players fought - I was not able to drive them on".
"We had really good moments but made mistakes and in this competition you can not do it".
"But if he's playing at his level we don't have any doubts that he's a player to stay until he decides because he's unique". When we accept this, it's the best way to improve and to accept the new challenge. We have to accept it with humility.
"I feel so bad for the players but this is a new opportunity and we start again".
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Guardiola has won every domestic honour since he arrived in England including two Premier League titles, but Manuel Pellegrini remains the only manager to take City into the semifinals of the Champions League after reaching the last four in 2016.
"We expect Kevin and Aymeric to return in the next few weeks", said Guardiola.
"When you don't go through it's because you don't deserve it and that's all". I don't think it is mental. They are little gaps but we have to solve it.
"Olek Zinchenko is back and other players have recently returned". "Ilkay Gundogan, Bernardo Silva and Joao Cancelo are in good condition".
"I had pressure when I was young", he said. I got pressure when I went to the national team and I have pressure now. I got pressure when I went to the national team and I have pressure now. I like it. It's all good.
"My mentality is to be as complete as I can be in every part of the game..."