The 21-year-old was named the Premier League's player of the month for August with a goal and two assists in City's first three matches and is confident his strong form will see him hold on to his starting place.
"It raises any players' game when there's four or five players who can play your position," Sterling told British media.
"You always want to be on the pitch, not in the stands."
Sterling was substituted by Sane after an hour in the Manchester derby on Saturday and agreed the 20-year-old had impressed on his debut after shrugging off a hamstring injury.
"Leroy's come in and he's a really good guy who I speak to a lot but obviously he plays the same position -- hopefully we can both be on the pitch at the same time but we have to work hard and show why we deserve to be involved," Sterling added.
The winger said he was happy to play in whatever position his coach asked him to after being switched from his favoured right flank to the left to accommodate Nolito.
"My favourite position is on the left but I'm happy to play anywhere across the front three," he said.
"Since day one the manager has tried to up the team spirit. Last year we were all close but now we're closer than ever."
City, who are top of the Premier League standings with four wins from four games, kick off their Champions League campaign against Germany's Borussia Moenchengladbach later on Tuesday.
(Reporting by Simon Jennings in Bengaluru; editing by Sudipto Ganguly)
