Doc Hudson is already gone by the time of Cars 2. The movie doesn’t show his death, but the franchise treats him as having died sometime between Cars and Cars 2 , which is why he’s absent from the sequel.

What the story implies

In-universe, Doc had been Lightning McQueen’s mentor in Cars , but after Paul Newman’s death, Pixar chose not to recast the role and instead wrote Doc out of the series. So in Cars 2 , what “happened” to him is simply that he had passed away before the events of the film.

Why fans talk about it

Because the movie never gives a specific cause of death, fans have speculated about what happened to him, but that is not confirmed in the films. The safest canon answer is: Doc Hudson died off-screen sometime before Cars 2.

If you want, I can also explain how Cars 3 handles Doc Hudson’s legacy.