Declining consumer confidence, driven by high unemployment and job concerns, is contributing to a decline in auto sales this year, analysts say.

Consensus predictions for the year had U.S. new vehicle sales settling in at 11.9 million units, well off historic levels but still ahead of 2009 sales. Now, analysts are looking at a revision to 11.2 million vehicles. Some are even calling for an 11 million-unit year.

That 700,000-900,000 unit swing will have a sizeable impact on the OE tire business for 2010, and would be the third straight year of significant sales declines. Looking forward, those declines will add up to declines in replacement tire sales opportunities.

The continuing decline in vehicle sales may also mean more car dealerships closures. “It is a difficult time to do business. I think we will see more dealership failures before this is over,” said Kelly Blue Book analyst Jack Nerad. “Some have been just hanging on and just won’t survive to better times.”

“The problem is that people are still not sure about their jobs, their retirement accounts or the value of their homes,” said auto researcher Jim Hossack.

Courtesy of TIRE REVIEW.