Louis van Gaal's men were completely outclassed by the Gunners in the opening half-hour at the Emirates Stadium as the home side skipped away to a three-goal lead.
Early goals from Alexis Sanchez and Mesut Ozil sent Arsenal on their way before the Chilean added a third in the 19th minute to essentially wrap up proceedings in an eventual 3-0 triumph which Neville felt was achieved due to United's inability to deal with a rampant North London outfit.
"Manchester United looked shell-shocked and it didn't look like they'd prepared for Arsenal's strengths - which were (Santi) Cazorla in midfield and stopping him playing and Ozil getting in space," said the Sky Sports pundit on the 'Gary Neville Podcast'.
"I have to say the tactic around the use of (Bastian) Schweinsteiger in the first half was odd. Not maybe to start with. If you look at the very start of the game, Manchester United's back four were pushed really far up the pitch. It looked like they were on the front foot and were going to go for them.
"After four or five minutes and you're 2-0 down you think it must stop. You have to retreat. You have to do something different and there was no change at all in the first half from United; no adaptation from what was happening.
"Schweinsteiger, (Michael) Carrick and (Wayne) Rooney got completely outnumbered, out-played and out-fought. Everything you wouldn't want in a central midfield.
"It exposed them. (Juan) Mata and (Memhpis) Depay don't get back and double up with (Matteo) Darmian and (Ashley) Young and it exposed Manchester United's full-backs in particular.
"Darmian probably had the most difficult game he's had. He's done very well since coming over from Italy, but he really struggled today and was subbed at half time.
"That midfield that protected Manchester United's back four in the past few weeks has been a very compact unit all the way through the team, but it wasn't there today. They got dismantled in that first half and the two full-backs got exposed against very, very good Arsenal play."