By Douglas A. McIntyre

Toyota Motor Corp. (TM) passed General Motors Co. (GM) to become the world's largest auto company after selling 9.75 million vehicles globally last year. While that's the main headline, what should be more important to investors is the contrast in the market value of the two. Toyota's is $152 billion, while GM's is $46 billion -- a gulf too large to be explained by sales. High expenses at GM are a better explanation.

Some may argue that the ownership by the U.S. government and unions of GM has tamped down its value. Meanwhile, Toyota has recovered from the production problems it ran into after the massive earthquake and tsunami in Japan. Still, those facts are insufficient to explain the difference between the two companies' values.

GM's management, under CEO Dan Akerson, has crippled the company's bottom line with successive poor decisions. The first of those was 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 yet to give investors a plan for this. The European recession has continued to press down car sales in the region, meaning GM must increase its share of a shrinking market. Local companies, particularly Volkswagen, have such deep roots that they will be impossible to dislodge.

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

GM's 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 in 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 U.S., but that is only half of its problem. The top car company in the U.S. spends too much.

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