Excadrill outclasses it in every single way.
Excadrill, 9/10 times, will be better for the team, I agree. I think unless you've got niche needs for Donphan, Excadrill's your Pokemon.
That being said, it's not like Donphan doesn't have its uses. Between the two, Excadrill has a huge weakness to Earthquake. So much so that it typically runs items just to prevent itself from being hurt by them.
I'm an MtG player, so outclassing in every way is really hard to see. In MtG, to be "strictly better", you have to be doing everything better. In most of the roles it is requested, again, Excadrill probably is much better. Typical Rapid Spin support, it probably is. It can find a favourable match up much easier than Donphan because of its Steel typing (who struggles against all special sweepers and many wall opponents). Game ender? Exacadrill can abuse Swords Dance and can easily go 2-3 KOs before being stopped, even with is 60 defence and more average speed this time around (due to lack of Sandstorm support if you go that route). Hits Levitate? Yup. It can do that too. Rotom-W poses almost no threat to Excadrill (OHKO) while Donphan is sent running after the switch in. And the mighty drilling mole thing has better coverage to boot. Finally, many of Excadrill's greatest threats are also Donphan's.
That being said, outclass in EVERY way isn't something that I see too often. Donphan had niche uses in Generation 5 and I think will continue to have niche uses in Generation 6. I think Smogon's monthly stats can easily tell you something: Donphan has use. It finds itself in the same range as Tentacruel, Mawile, and Blissey in commonality. I've seen a few; people don't vary from the straight and narrow most of the time. It's much like throwing Amoonguss on your team: It has one use and one use only. But if you need it, it can provide that role. Other stats tell you it's 4 moveset really isn't changing, even with the introduction of Play Rough. It is used in less than 15% of all Donphan (would post, but my account doesn't have enough posts to let me put up URLs yet)
I think the biggest factor is that Donphan is a standard Stealth Rocks/Rapid Spin setter if you need one. Forretress, to memory, is the only other common Rapid Spin/Stealth Rock wielder. Excadrill can do it as well, but it has as to rely fully on HP in its 110/60/65 bulk. Donphan can reliably, though it'll get murdered for it, set up on the ever common Talonflame (3HKO on Donphan if you need it to be done) whereas Excadrill steps out, says hi, and collapses. Especially since you aren't likely to be running Rock Slide if you are using Stealth Rocks.
Outclassing in every way is an exaggeration, but not far from it.
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