On most business section front pages, both print and digital, much of the coverage has gone to the fact that Toyota Motor Corp. (NYSE: TM) passed General Motors Co. (NYSE: GM) to become the world’s largest auto company by global unit sales at 9.75 million. However, what is more important to investors is the contrast in the market value of the two companies. Toyota’s is $152 billion. GM’s is $46 billion, a gulf too large to be explained by sales. High expenses at GM are a better explanation.

Experts may argue that the ownership the U.S. government and unions have had in GM has tamped down its value. On the other hand, Toyota has benefited from a recovery from the production limitations that hit it due to the tremendous earthquake in Japan. But those facts are not sufficient.

GM’s management, under CEO Dan Akerson, has crippled the company’s bottom line. First among management’s poor decisions has been to keep a major presence in Europe. The Vauxhall and Opel units lose several hundred million dollars a year, and they have been a drag on GM’s profits for decades. Akerson claims GM can turn Europe around, but he has not given investors a plan for this. The European recession has continued to press down car sales in the region. GM must increase it market share of a shrinking pie there. Local firms, particularly Volkwagen, have such deep roots that they will be impossible to dislodge.

The second knock against Akerson, which appears frequently in comments about GM, is that it has not produced enough new models in the United States to keep its market share at home. U.S. market share for GM dropped from 19.6% in 2011 to 18.1% last year.

GM’s most significant problems make clear Akerson’s single largest mistake. He has not matched global expenses with revenue, which means that costs worldwide need to be cut. GM’s revenue in the third quarter was $37.6 billion, compared to $36.7 billion in the same period for 2011. But net income dropped from $1.7 billion to $1.5 billion. Specifically the problem was that:

GM North America (GMNA) reported EBIT-adjusted of $1.8 billion compared with $2.2 billion a year ago.

GM Europe (GME) reported an EBIT-adjusted of $(0.5) billion compared with $(0.3) billion a year ago.

Analysts may say that the heart of GM’s problem is revenue in Europe and the United States. That is not accurate. The top car company in the U.S. spends too much.

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