Reports have suggested for weeks that General Motors was anxiously approaching its crucial initial public offering, with sources now citing the automaker’s intentions to begin the process during the week of August 16, 2010.

Two sources familiar with GM’s plans told Reuters that the automaker is planning to begin the IPO process by filing with the Securities and Exchange Commission the week of August 16, which will quickly follow GM’s expected second quarter financial results release.

Reuters says that the same sources, which have asked to remain anonymous, indicated the reason for the filing date was to attempt to complete the IPO process before the November U.S. elections – rather than to complete the IPO based on optimal market conditions.

The case for the IPO being driven by politics
When news first broke that GM was getting far more serious about making its IPO happen in 2010, many economists and automotive industry analysts began to voice their concerns about the timing of the IPO. Many asked if arguably one of the largest IPOs in U.S. history could be supported during questionable economic times, particularly as very recent reports are suggesting the very real possibility of a double-dip recession as the bulk of high-risk mortgage defaults are still ahead.

In a press release following the leak by Reuters which named the November elections as a major factor in the hurried nature of the IPO, Jeremy Anwyl, CEO of Edmunds shared his thoughts on the timing of the IPO, “This is certainly not the economic climate in which I’d want to have an IPO since it is likely to reduce the initial valuation of the stock. Negativity about the economy continues to swirl about and the psychological effect is putting a damper on all things it touches; what may be the most significant IPO in history will not be immune.” Anwyl added, “One can’t help but wonder: what is the rush?”

Similar questioning followed by Anwyl’s colleague, senior editor Bill Visnic, who posed these three questions:
1.) Is there pressure from current shareholders like the government and the UAW VEBA trust who are anxious to liquidate their shares?
2.) Is GM trying to go public while the company has a fair amount of positive momentum in anticipation that the future may not be quite as positive?
3.) Is the timing political, targeted to happen before the next election so that the current administration can take credit for seeing the process from start to finish?

Questions one and three obviously share much in common, and also appear to be the main motive suggested by most critics of the IPO’s timing as the U.S. Treasury owns 61 percent of GM, while the UAW owns 17.5 percent. The second question poses a very fair question, a question answered in part below in the section dedicated to defending the timing of the move.

Regardless of the answer, Anwyl, like many taxpayers, simply seeks answers from GM. “Regardless of whether any of these possibilities hold any weight, GM executives must have reasons for expediting the IPO. The company would benefit from clarifying its reasoning publicly and openly in order to build trust and credibility and to resolve public curiosity.”

Forbes also raised questions surrounding the suspect timing of an IPO at GM, suggesting, “With November’s midterm elections looming, being able to say GM was taken in and out of bankruptcy and back to the public market in just over a year would be a feather in the Obama Administration’s cap, though not necessarily in the best interests of the company or the prospective new shareholders.”

In early July, before the information was leaked to Reuters, Time magazine recently ran an article titled, “A General Motors IPO? Don’t hold your breath.” The article laid out the argument that despite GM’s chairman, Ed Whitacre, voicing “off the record” that he would like to hold the IPO sooner rather than later, that several conditions likely meant the IPO would still be in the somewhat distant future.

Time points out that although GM’s sales are up 14 percent so far in 2010 compared to the rather dismal 2009 figures, GM and others have faltered in recent months. GM’s sales dropped 8 percent in May, and then further dip 10 percent in June. Van Conway, an analyst from Conway McKenzie, which is a restructuring advisory service, told Time that he is confident GM will eventually be capable of holding a successful IPO, but that holding an IPO now as opposed to after auto sales have returned to a more stable and sustainable path could cost GM as much as 30 percent of its potential income from the IPO – a percentage that could represent several billion dollars which would never again be able to be recouped.

Should the motives behind the IPO be found to be based on political favors rather than fiscally responsible, strategically timed decisions aimed at giving the best possible long-term chance at remaining profitable, both General Motors and the Obama administration could suffer terrible blows to their reputations. For GM, it could be a devastating blow to its fight to distance itself from accusations of government control, only further pushing prospective buyers to competitive automakers – particularly Ford – which has already benefited from the government’s role in saving GM and Chrysler.

The case for GM’s IPO being driven by profits
Despite most analysts suggesting poor timing for GM to consider an IPO, some believe that timing may be just right – regardless of elections.

One argument for now being the “right time” for GM’s IPO was presented to Forbes by Peter Morici, a professor in the Robert H. Smith School of Business at the University of Maryland. Morici suggested that the current auto market, despite being lower than very early projections, is still outpacing the housing and job markets.

As such, Morici makes the case that GM may have a very small window in which it might be able to achieve a greater performance from its IPO than the economy should otherwise support, before months go by and the struggling economy potentially brings the auto industry down to the same struggling levels as other sectors. Morici warns that the auto industry may be at its peak for the next 12-18 months, and if GM doesn’t act now, it may be stuck holding onto taxpayer money for another year and half to two years.

GM pleads its case as for an IPO
In the final days of June, several top brass from GM told the AFP that they were extremely optimistic about the automaker’s positioning, suggesting that they were in a strong place should they move towards an IPO.

Chris Liddell, GM’s CFO, suggested that GM was “fantastically positioned” for an IPO while speaking to investors from Wall Street, pointing to the automaker’s ability to reach a break-even for its global operations despite being in the midst of the “bottom” of the market by many analyst’s predictions. “Once you pass the break-even point the marginal contribution from the sale of a vehicle is very high,” said Liddell.