The filmmakers cut this scene because it didn't fit with their goals for the film's story.

Ahead of Cars 3 coming out on Blu-Ray on November 7, a newly released deleted scene shows the treacherous Sterling forcing Lightning McQueen – the franchise’s star – into retirement. It seems rather dark and maybe a little too real for a film primarily for kids.

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In this version of the film Rust-eze Racing team owner Sterling would have realized that Cruz Ramirez, McQueen’s trainer, was the one more fit for the track. In this scene, Sterling corners McQueen in a garage and tells him that it’s time to quit competing. 

Sterling takes the pragmatic view that McQueen can become an even bigger brand after he stops racing. McQueen could make even more doing sponsorships than racing could ever offer, Sterling argues. McQueen wants to race, though. He has no interest in pitching tires.

At the end of the scene, Sterling strips off McQueen’s racing numbers and says that he’s no longer on the entry list. Ramirez will take McQueen’s place.

This scene would have robbed McQueen of a lot of agency in the film by making a third party decide for him to quit racing rather than coming to that conclusion naturally. SPOILER ALERT: In the final movie, McQueen is the character that realizes Ramirez’s talent and asks her to race for him.

“We tried in that early version where McQueen mistakenly thinks [Cruz] betrayed him, to steal his spot,” Cars 3’s director Brian Fee told USA Today. “In that version it looked like it was a betrayal. Later you would come to find out that she had nothing to do with it. Cruz didn’t actually betray Lightning.”

Cars 3 brought it nearly $153 million at the box office in the United States, which made it the worst performing entry in the franchise. According to Box Office Mojo, the first Cars film made $244 million in America, and Cars 2 grossed $191.5 million in the country

Source: USA Today, Box Office Mojo, Lightning - McQueen via YouTube