For credit unions and other financial institutions, do these massive recalls trickle down to auto lending activity?

"I really don't see this as a significant factor impacting credit unions," said Dave Colby, chief economist at CUNA Mutual Group. "Consumers will continue to look for monthly payments, MPG and vehicles that fit their needs."

In fact, recalls and a manufacturer's desire to rebuild trust can actually work in a customer's favor.

"In the past, after major recalls, many consumers believed that after such bad press, a manufacturer would err on the side of caution so as not to have another recall, thus the perception of quality actually went up," Colby explained.

At the $601 million Seattle Metropolitan Credit Union, the GM recall will not have a significant impact because only 8% of its auto loan portfolio is secured by GM collateral, said Caleb Cook, vice president of lending. In addition, the credit union is not an indirect auto lender and does not have a high concentration in any particular brand of vehicle or dealership, Cook added.

"The overall impact of the potential adverse impact on the valuation of GM collateral will be negligible for SMCU since we are not highly concentrated in these vehicle types, and generally we have lower loan-to-values on our direct loans compared to industry averages," Cook said.

As for whether there is any certain insurance for recalled vehicles, Cook said he is not aware of this type of coverage. However, SMCU members who purchase extended warranties from the credit union have the added protection for issues not related to the recall. He advised GM vehicle owners to talk to their insurance companies about any potential impact of the recall.

Volume with GM products has remained flat over the past 90 days for Autoland Inc., a Chatsworth, Calif.-based CUSO that serves more than 200 credit unions nationwide, said Jeff Martin, president/CEO. The firm has yet to see any pushback from credit unions financing a GM product, he noticed.

"GM itself posted a 13% gain in May. Though the recall may be of concern to consumers, GM is rich with incentives for buyers and there are many new models. The recall mostly impacts older models," Martin said.

Still, financial institutions with concentrations in GM vehicles may be exposed to additional layers such as adverse impacts on collateral valuation, loss of consumer confidence in the GM brand, and increased loan loss risk, Cook said.

"The recall has received significant attention at the corporate level because of the lack of transparency and timely disclosure of the issues," he added. "I believe if GM can get past the corporate reputation issues and roll out the recall to consumers in a transparent fashion that they would actually increase sales of new vehicles."

Consumers may opt to trade in older GM vehicles for newer vehicles as the financing options are very attractive, and GM has consolidated their offerings into their four most powerful brands, Cook noted. The SMCU executive said he saw a similar trend when Toyota's massive recalls were accompanied by enticing incentives as the automaker focused on rebuilding consumer confidence by targeting brand recognition, reliability and improved efficiency.

Martin said for the most part, consumers may not be as alarmed about recalls as some would think especially since repairs are of no charge to vehicle owners.

"There have been so many over recent years, it could be the consumer or member shrugs them off at this point," the Autoland executive suggested.

Meanwhile, it doesn't appear that the demand for new vehicles is waning. The latest data from CUNA Economics and Statistics showed year-over-year growth in the new vehicle loan portfolio at 16.3% as of April, the latest month tracked, Colby noted.

"New vehicle sales volumes are now high enough that manufacturers have really backed away from financing subsidies and this is what is helping credit unions grow new vehicle loans," he added.