Villa were thrashed by Manchester City 4-0 last night.
Gray told talkSPORT: "Villa are going nowhere. It is a ship out in the sea, rudderless.
"The boss of the club [Randy Lerner] doesn't want to be around at all. He doesn't want to be there leading the club.
"The money has dried up, I know that for a fact, and there's not going to be a lot to invest for Paul Lambert to make the squad any better.
"I'm sad to say this but I don't see any improvement for Villa next season. It will be another season of struggle and that's a shocking thing to be saying about them."