Toyota will soon displace General Motors as the world’s largest automaker.  Since 2000, GM's market cap fell from $66 billion to $15 billion. In 1980 GM sold 45 of every 100 cars that rolled out of showrooms in the U.S. It now sells 26. By any Yardstick, that is a crisis. The root cause of this financial cataclysm mystifies many of the players in the industry. But the numbers tell a clear story.

The headlines offer a simplistic interpretation. They say that legacy costs, poor cost control, ill-advised investments in other automakers and in undistinguished products--all of which are serious issues---caused the trouble. That's wrong.  Or, worse, incomplete and myopic ---the same kind of myopia that created the problem in the first place.