When you look at the output code from a C compiler, it tends to be small and fast, and relatively light on resources. In many cases, with modern compiler optimizations, the resulting code can actually be smaller and faster than all but assembly code written by someone who really knows how to optimize for a specific machine. Almost all embedded development work is done in either C or assembly, and C tends to be faster to write, and portable - so you can move the code to the next project if necessary.
Using any 'modern' object oriented language immediately adds a level of bloat which is generally not acceptable in places where C still shines. These modern programming languages are written for environments where a few extra bytes or a few extra cycles isn't going to cause a problem. When working on a resource-limited platform (aka where you'd kill for a few hundred KB of code space, and more than a few thousand bytes of ram) you're just not going to be able to use a modern language because of the overhead of an object oriented language.
I'd actually predict C is going to grow in the near term, just because of the growth of internet-connected low-resource devices. I actually develop products on a platform which has a complete TCP/IP stack (including web server and SNMP) running in less than 128KB (yes K not M) of memory. These and other similar small platforms are going to be the basis of the 'things' half of the internet of things, all of which are going to have C code at their base.