The Chilean says the Premier League title hopefuls need to keep improving their squad year on year in order to remain competitive.
The Blues were disappointing in their title defence last season, as they failed to keep up with eventual winners Chelsea, while they were also knocked out of both domestic cup competitions and the Champions League early.
That has led to suggestions that the squad at the Etihad needs a major overhaul if they wish to compete on all fronts, with the club expected to be busy in the transfer window, and Pellegrini agrees with that line of thinking.
“We need to improve the squad because he wants to keep progressing year after year,” he told El Mercurio.
“Teams always need new faces and there is an increase in quality that we need to give City. It was demonstrated against Barcelona. But I'm in a club that is growing, because it has the economic potential to do so.”
That increase in economic power since Sheikh Mansour’s takeover naturally led to increased expectations at the club, with fans now demanding trophies on a regular basis.
While they have been able to deliver domestically, with two Premier League titles, as well as both FA Cup and Capital One Cup triumphs to their name in recent seasons, Europe has proved a different animal.
For several seasons now, City have disappointed in the Champions League, with a poor performance over two legs against Barcelona last term highlighting their shortcomings once again. Pellegrini acknowledges that there is still a big gap to bridge between City and Europe’s elite, but maintains that the club are doing all they can to close it.
“There is a great distance between us and the major clubs in Europe,” he added.
“We are trying to shrink it, on the pitch and in the boardroom. For next season I hope to win, the team plays well, you like it, because there are ways and ways to win. I like to win with attractive teams.”