Every chapter of the Quran begins by “In the name of Allah , the most Gracious, the most Merciful” clearly highlighting that more than anything God is the most Merciful. Furthermore, the following hadith explicitly shows that Allah addresses all humans (O son of Adam) conveying the unlimited extent of the mercy of Allah as even a non-muslim or one who has committed the heinous sin of murder may be forgiven by Allah if they repent:
On the authority of Anas (may Allah be pleased with him), who said: I heard the Messenger of Allah (peace and blessings of Allah be upon him) say: “Allah the Almighty said: ‘O son of Adam, so long as you call upon Me and ask of Me, I shall forgive you for what you have done, and I shall not mind. O son of Adam, were your sins to reach the clouds of the sky and were you then to ask forgiveness of Me, I would forgive you. O son of Adam, were you to come to Me with sins nearly as great as the earth and were you then to face Me, ascribing no partner to Me, I would bring you forgiveness nearly as great as it.'” [At-Tirmidhi (also by Ahmad ibn Hanbal). Its chain of authorities is sound.]

Additionally, consider the population of muslims to non-muslims and you’l find that the amount of non-muslims is extremely larger than the amount of muslims even in this day and age. Lastly, if 1/1000 of humanity (from the dawn of man) believes in Allah only and ascribes no partners unto Him then logically 1/100 people will enter heaven.

If only one from a thousand are saved, it’s clear that a very tiny fraction of mankind will be at the receiving end of Allah’s mercy.

No, you are right. The situation is hopeless. We are all doomed, Muslims and non-Muslims alike. All people are hypocrites. Read Surat al Asr to understand this truth. “By the token of time. Verily, man is in loss.”

I might be answering your question super late but I just came across this thread. I paraphrase… when the prophet (pbuh) told the companions this, they became visibly scared and inquired how they could ever have the chance of being that 1/1000. The prophet(pbuh) replied saying the ranks of Yajooj and Majooj (Gog and Magog) are large.

I summarized this from a speech so may Allah(swt) forgive me if I said anything wrong intentionally or unintentionally.

And remember brother in Islam, Allah(swt) is Most Forgiving.