Automaker BMW recalling 200,000 vehicles

The German automaker said the recall involves the 2006 3 Series, the 2004-2006 5 Series, and the 2004-2006 X3 compact sport utility vehicles in the United States.

The National Highway Traffic Safety Administration said in a posting on its Web site that small cracks could develop in a seat detection mat and deactivate the front passenger air bags.

NHTSA said the air bag warning lamp and the passenger air bag "on-off" light would remain on. The head protection system, however, would not be affected, the government said.

BMW spokesman Tom Plucinsky said there were no injuries or accidents reported.

Oil rebounds after U.S. gasoline drops

NEW YORK -- Oil prices rebounded Wednesday, jumping back to $116 a barrel after the government reported a bigger-than-expected drop in U.S. gasoline supplies. But more signs of dwindling U.S. demand cast doubt on the rally's longevity.

At the pump, a gallon of regular gasoline shed on average another penny overnight to $3.787, according to auto club AAA, the Oil Price Information Service and Wright Express. That's nearly 8 percent lower than record prices above $4 a gallon reached last month, but still 37 percent higher than a year ago; retail gasoline prices tend to lag behind crude oil's moves by several weeks.

In its weekly inventory report, the Energy Department's Energy Information Administration said gasoline supplies fell by 6.4 million barrels to 202.8 million barrels for the week ended Aug. 8, nearly three times more than the 2.2 million barrel drop analysts surveyed by energy research firm Platts had expected.

The big drop in gasoline stocks prompted traders to buy oil and gasoline contracts on signs of supply tightness. However, analysts said the surprisingly large drawdown suggests that U.S. refineries are scaling back on production in response to falling demand -- not that Americans are suddenly driving more because of easing pump prices.

Chrysler says Cerberus is in for long term

TRAVERSE CITY, Mich. -- Even if private equity firm Cerberus Capital Management LP intends to sell Chrysler LLC in pieces, Chrysler Vice Chairman Tom LaSorda says it won't happen anytime soon.

Cerberus founder Stephen Feinberg has given assurances that the investment firm will stay with Chrysler for the long term, LaSorda said Wednesday. But even if it wanted to sell after owning the automaker for just over a year, now is not the time with the U.S. auto industry in a slump, LaSorda said.

"No one is going to buy a car company like this in the market that its in," he told reporters after speaking at the Center for Automotive Research Management Briefing Seminars in Traverse City. "One could argue is it worth as much as they paid for it initially based on today's market?"

LaSorda said Chrysler's brands -- Chrysler, Jeep and Dodge -- are worth a lot if they are sold.

Deere 3Q profits rise but miss expectations

Deere & Co., the world's largest of maker of farm machinery, reported third-quarter earnings that missed Wall Street expectations and said escalating raw material costs will erode its profits later this year, pushing shares down more than 3 percent on Wednesday.

Quarterly profit rose 7 percent as high crop prices spurred stronger sales of tractors and harvesting equipment, but lower sales of its consumer, construction and forestry equipment, coupled with higher costs of raw materials such as steel and rubber, hurt the company. It was the second straight quarter the Moline, Ill.-based company fell short of expectations.

Macy's says 2Q profit falls

NEW YORK -- Macy's Inc. posted a lower second-quarter profit Wednesday and warned that its full-year earnings will be below expectations. That, along with a pared-down outlook from a key supplier and a somber government report on retail sales in July, suggests a persistent slowdown for retailers as they face the critical back-to-school and holiday shopping seasons.

Companies reliant on clothing sales -- like Cincinnati-based Macy's and supplier Liz Claiborne Inc. -- are having an especially tough time as shoppers focus increasingly on necessities with some exceptions like iPhones. The government's monthly report showed that sales at department stores and other general merchandise stores rose by 0.3 percent last month, just half the 0.6 percent June increase.

"The consumer is still stressed. ... Mall traffic is still down and shows few signs of resuming," said Craig R. Johnson, president of Customer Growth Partners, a retail consulting group, noting that Apple stores at the mall are among the few exceptions. "Back-to-school doesn't mean denims and tops any more. It means iPhones and laptops."