Despite rising turmoil surrounding its handling of recalled vehicles with faulty ignition switching, Fitch Ratings does not expect to change the rating status of asset-backed securities connected to General Motors.

Currently, Fitch has GM listed as BB+ with the automaker’s outlook as positive

Analysts pointed to a specific reason why no change is on the horizon even though GM said last week the recall is expected to cost the company $1.3 billion during the first quarter.

“We believe the company’s cash flow and cash position will allow it to weather these challenges,” Fitch analysts said. “As of the latest recall announcement, the total estimated cost of the recalls announced in March and April swelled to $1.3 billion, while GM held $38 billion in liquidity at year end. However, over the long run, the recall may result in reputational damage that could result in a sales decline.”

Although the expected cost of the recalls is significant, Fitch indicated GM’s existing liquidity and cash flow-generating potential provide sufficient financial flexibility to cover the costs and still maintain a strong liquidity position.

As of the close of 2013, analysts calculated GM’s automotive liquidity stood at $38 billion, including $28 billion in cash and cash equivalents and $10 billion of revolver availability.

“In Fitch’s view, the greatest negative outcome of the recalls could be on GM's reputation and increase the potential for sales to slip for an extended period,” Fitch analysts said.

The firm recapped that GM’s U.S. sales in March rose 4.1 percent year-over-year. That figure was a little below the overall market rise of 5.6 percent, but not out of line with other volume manufacturers, “suggesting the sales impact has been muted so far,” according to Fitch.

Analysts also reiterated that many of the recalled vehicles are older models that are out of production, which may help minimize the impact on current vehicle sales.

“Also, the very large number of recalls announced by other manufacturers in recent weeks, including Toyota and Nissan, may somewhat temper consumers’ view of the GM recalls,” Fitch said.

Fitch wrapped up its latest update on GM by touching on another problem GM faces.

“A large number of lawsuits, including class action suits, have been filed against GM related to the recalls. These could potentially drag on for years and create some additional risk for the company,” Fitch said.

“As many involve prepetition claims, the situation is complex and will require GM to effectively balance its legal obligations with its reputation in the market,” the firm went on to say. “The lawsuits are also likely to force management to focus on rectifying legacy issues at a time when it needs to continue to move the company forward.”

GM is facing continued pressure from U.S. lawmakers to ground all of the recalled vehicles until they can be repaired. The latest report on the activities associated with chief executive officer Mary Barra is available here.