Pine is a very soft wood. Even though the surface may feel hard, once you scratch it, you can tell just how soft the inner heart of the wood feels. While pine is often used in spite of this issue, when this wood gets wet, it is very apt to warp. Warping is caused when moisture soaks into the soft wood. The wood expands when wet, and then contracts once it dries out. The result can range from slight warping to very badly damaged wood.
Because pine is so soft, it is not a good wall material in an area where it will subject to getting nicks and scrapes. If you bump into this type of wood with something hard or sharp, you will definitely leave behind a mark. This is not only unsightly, but these small chips can give mold and mildew a place to grow and eat away at the wood. Over time, a small chip can turn into a large problem.
If you plan to hang unfinished pine over insulated wall framing, be aware of the potential for moisture issues. Unfinished pine will breathe, allowing moisture to seep in and behind the wood. Batt insulation that is commonly used in a garage is a material that is very susceptible to mold and water damage. Worse, you may not ever know just what is going on behind the wood panel until it is too late.
If you like the look of unfinished pine but you still want to use it for a garage, there are a few solutions. The wood can be sealed with a clear coating that will not only protect it from water damage, but also from little bumps and scrapes. Polyurethane is a common choice, but make sure you choose a non-yellowing type. You can also use deck sealant to get a clear seal over the wood, but you will need to reapply it every few years to retain the moisture repellent benefits.