Tighter auto-loan restrictions continue to impede an immediate full recovery of auto sales, says a study by the consultancy A.T. Kearney.

Pointing to a pent-up demand, the firm predicts auto sales will trend back to levels of about 16 million a year by 2012.

Part of that pent-up demand is due to a lack of financing for non-prime car buyers. A.T. Kearney predicts that from 2009 to 2014 about 3.5 million of potential new-car consumers will end up buying used cars instead.

“At current loan rates, a 1-point increase in loan approval rates can increase the demand for new vehicles by as much as 350,000 units,” Says Dan Cheng, a partner in Kearney’s automotive unit.

That annual-unit number reflects potential new-car buyers, who were blocked out of the market, reentering it as credit availability increases.

The firm’s improved sales forecast depends on the U.S. economy recovering. Financing problems on the non-prime credit front notwithstanding, signs of hope include an increase in vehicle loan-rate approvals for customers with high credit scores.

“Credit availability will play a key role in the speed of the auto-industry recovery,” Cheng says.

Overall, the auto finance market has remained stable, with growth occurring in prime segments, according to a quarterly review by Experian Automotive. The total prime market is up 2.55%. “

“Consumers are financing higher loan amounts with stable terms and declining rates,” says Melinda Zabritski, Experian’s director-automotive credit.

However total loan balances continue to decline, originations continue to tighten on both new and used financing and repossessions were up 0.77% from fourth-quarter ’09 to first-quarter ’10, she says.