Roberto Mancini denied feeling embarrassed after Manchester City ended their European campaign with the lowest points tally of any English team in Champions League history – but admitted his side have a "big problem" scoring goals.

Julian Schieber's 57th-minute winner for Borussia Dortmund also ensured City, who failed to qualify for the Europa League after finishing bottom of Group D, became the first English side not to win a single group stage game. Even the Blackburn side of 1995-96, hitherto regarded as representing the nadir of English incompetence in Europe's premier club competition, managed four points. City ended up with three.

"You can't be embarrassed when you play 100%," said Mancini, whose side have scored just four times in the past five games. "I don't feel we lost our application but if you want to win games you have to score and at the moment we have this big problem. When we have a chance we don't convert it and we need to resolve this."

Mancini also insisted that Group D was a proper league of champions, with the Spanish, German and Dutch winners having to fight it out like cats in a sack, and that his side had been unlucky in key moments.

"There were four teams in our group that could win a Champions League, and we made some mistakes in the opening few games and we didn't get time to recover," he said. "We were ahead against Real Madrid in our first game and we were 1-0 up in Amsterdam and had two or three chances to score another but we paid for not taking our chances."

Mancini, however, claimed that morale would not be a problem ahead of the Manchester derby on Sunday, adding: "We didn't lose the Champions League on the night and we have five days to recover our strength."

However a despondent Joe Hart offered a more downbeat assessment of City's performance, questioning whether his team-mates had lost their spirit after they went behind. "I think it was there but then they score and it disappeared," he said.

"We've not qualified, we've not even got in the Europa League," he added. "We wanted a win and we've let ourselves down. We wanted to do it and if that meant Europa League then great. We've only got ourselves to blame."

Mancini is not certain that failing to qualify for the Europa League will provide an advantage in the title race over United, who remain in the Champions League. "It could be because we don't play Thursday but we play a team like United who are used to playing Champions League every year," he said. "It depends on us I think."

There were words of encouragement for City from the Borussia Dortmund manager, Jürgen Klopp, who pointed out that his side were knocked out in the first round of the Champions League last year. "I'm still very impressed by the quality that Manchester City have in their team but tactically we could minimise their threats," he said. "It's a very good team. And the quality of English football is still strong."

"We made six changes but we played real football and were fast in attack. We are a very difficult team to play against – and I'm sure the teams who finish second in their groups aren't looking us and saying: 'We want to play them.'"

City, who will fly home on Wednesday to prepare for the visit of United on Sunday, can certainly vouch for that. Victory in the derby would erase the short-term memory of this dismal European campaign but their plummeting Uefa coefficient is likely to ensure that the after-effects are felt when the draw for the 2013-14 Champions League is made late next summer.