Delphi Confidential                                                


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549-1004

                                    FORM 10-Q

 X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 
---   EXCHANGE ACT OF 1934

      For the quarterly period ended March 31, 1999

                                       OR

____  TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT
      OF 1934

      For the transition period from ____________ to _______________.


                           Commission file No. 1-14787


                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION
             (Exact name of registrant as specified in its charter)


                Delaware                                      38-3430473
      (State or other jurisdiction of                       (IRS employer
      incorporation or organization)                    identification number)


      5725 Delphi Drive, Troy, Michigan                          48098
      (Address of principal executive offices)                (Zip code)


      Registrant's telephone number, including area code (248) 813-2000



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements  for the past 90 days.  Yes ___ . No X We  became  subject  to such
filing  requirements  on  February 4, 1999 and have filed all  required  reports
since that date.

As of April 30, 1999,  565 million shares of the issuer's $0.01 par value common
stock were outstanding.





                                       1



                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                                      INDEX

Part I - Financial Information                                          Page No.
                                                                        --------

   Item I. Financial Statements

      Consolidated Statements of Income (Unaudited) for the three months
        ended March 31, 1999 and 1998                                        3

      Consolidated Balance Sheets at March 31, 1999 (Unaudited) and
        December 31, 1998                                                    4

      Consolidated Statements of Cash Flows (Unaudited) for the three months
        ended March 31, 1999 and 1998                                        5

      Notes to Consolidated Financial Statements (Unaudited)                 6

   Item 2. Management's Discussion and Analysis of Financial Condition and
             Results of Operations                                           13

Part II - Other Information

   Item 1.  Legal Proceedings                                                19

   Item 6.  Exhibits and Reports on Form 8-K                                 19

Signature                                                                    20

Exhibit     Change in Control Agreement between Delphi and certain of its
 10 (a)      officers and other executives                                   n/a

Exhibit 27  Financial Data Schedule (for SEC information only)               n/a
















                                       2



                                     PART I

                          ITEM 1. FINANCIAL STATEMENTS

                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


                                                     Three Months Ended
                                                          March 31,
                                                     1999           1998
                                                     ----           ----
                                                   (in millions, expect per
                                                        share amounts)
                                           
Net sales:        
General Motors and affiliates                      $ 5,853        $ 6,105
Other customers                                      1,616          1,518
                                                   -------         -------
        Total net sales                              7,469          7,623
                                                   -------        -------
Less operating expenses:
Cost of sales, excluding items listed below          6,391          6,789
Selling, general, and administrative                   384            300
Depreciation and amortization                          237            200
                                                   -------        -------
        Total operating expenses                     7,012          7,289
                                                   -------        -------
Operating income                                       457            334
Less interest expense                                   24             64
Other income, net                                       25             79
                                                  ---------       -------
Income before income taxes                             458            349
Income tax expense                                     174            113
                                                   -------        -------
Net income                                         $   284        $   236
                                                   =======        =======
Earnings per share (Note 2)
Basic and diluted                                  $  0.55        $  0.51
                                                   =======        =======


                      See notes to consolidated financial statements.















                                       3


                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                           CONSOLIDATED BALANCE SHEETS

                                                        March 31, December 31,
                                                        1999             1998
                                                        ----             ----
                                                    (Unaudited)
                                                            (in millions)
            ASSETS                    

Current assets:
   Cash and cash equivalents                          $ 1,123           $  995
   Other marketable securities                             11                5
                                                      -------           ------
     Total cash and marketable securities               1,134            1,000
Accounts receivable, net:
   General Motors and affiliates                        4,387            2,236
   Other customer                                       1,312              977
Inventories, net (Note 3)                               1,539            1,770
Deferred income taxes                                     268              285
Prepaid expenses and other assets                          90              137
                                                      -------           ------
     Total current assets                               8,730            6,405

Property, net                                           4,907            4,965
Deferred income taxes                                   3,026            2,813
Other assets                                            1,416            1,323
                                                      -------           ------
Total assets                                          $18,079          $15,506
                                                      =======          =======

            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable and current portion of
     long-term debt (Note 8)                          $   219           $  359
   Accounts payable:
     General Motors and affiliates                        147               89
     Other suppliers                                    2,444            2,171
   Accrued liabilities                                  1,708            1,438
                                                      -------           ------
     Total current liabilities                          4,518            4,057

Long-term debt, including intracompany
     note payable to General Motors in 1998 (Note 8)    1,667            3,141
Pension benefits                                        2,208            2,180
Postretirement benefits other than pensions             4,703            4,573
Other liabilities                                       1,632            1,546
                                                      -------           ------
     Total liabilities                                 14,728           15,497
                                                      -------           ------
Stockholders' equity (Note 4):
   Preferred stock, $0.10 par value, 650 million shares
     authorized, none outstanding                        --                 --
   Common stock, $0.01 par value, 1,350 million shares
     authorized, 565 million shares outstanding             6              --
Additional paid in capital                              3,233              --
Retained earnings                                         284              --
General Motors' net investment                           --                 77
Accumulated translation adjustments                      (172)             (68)
                                                      --------          -------
     Total stockholders' equity                         3,351                9
                                                      -------           -------
Total liabilities and stockholders' equity            $18,079          $15,506
                                                      =======          =======

                 See notes to consolidated financial statements.


                                       4



                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

                                                              Three Months Ended
                                                                    March 31,
                                                                1999      1998
                                                                ----      ----
                                                                 (in millions)
Cash flows from operating activities:
   Net income
   Adjustments to reconcile net income to net cash             $ 284     $ 236
     provided by operating activities:                                 
     Depreciation and amortization                               237       200
     Deferred income taxes                                      (162)        9
   Changes in operating assets and liabilities:                        
     Accounts receivable, net                                 (4,174)     (332)
     Inventories, net                                            222       157
     Prepaid expenses and other assets                          (106)        4
     Accounts payable                                            256      (207)
     Accrued liabilities                                         267      (171)
     Other long-term liabilities                                 312       136
   Other                                                          28       217
                                                              -------    ------
      Net cash (used in) provided by operating activities     (2,836)      249
                                                              -------    ------
Cash flows from investing activities:                                  
     Capital expenditures                                       (235)     (297)
     Acquisition of marketable securities                        (21)     (213)
     Liquidation of marketable securities                         15       209
     Other                                                        75         3
                                                               -----     ------
      Net cash used in investing activities:                    (166)     (298)
                                                               ------    ------
Cash flows from financing activities:                                  
     Proceeds from issuance of common stock                    1,621        --
     Borrowings from credit facilities, net                    1,527        --
     Cash effect of assets and liabilities                             
      transferred to General Motors                              --         52
                                                               ------    ------
      Net cash provided by financing activities                3,148        52
                                                               ------    ------
Effect of exchange rate fluctuations on cash                           
     and cash equivalents                                        (18)       (7)
                                                              -------    ------
Increase (decrease) in cash and cash equivalents                 128        (4)
     Cash and cash equivalents at beginning of period            995       989
                                                              ------     ------
     Cash and cash equivalents at end of period              $ 1,123     $ 985
                                                             =======     ======

                 See notes to consolidated financial statements.






                                       5



                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. BACKGROUND

   Delphi  Automotive  Systems  Corporation  ("Delphi") was incorporated in late
1998 as a subsidiary of General Motors  Corporation  ("General Motors" or "GM").
During 1998,  GM announced its  intention to create and  eventually  divest of a
separate  company  consisting  of the GM  businesses  and  operations  that  now
comprise Delphi and the associated assets and liabilities of such businesses and
operations (the  "Separation").  The divestiture is occurring in two stages, the
first of which involved an offering to the public of  approximately  100 million
shares of Delphi's $0.01 par value common stock in February 1999 (the "IPO"). GM
currently  owns  approximately  82.3% of the Delphi  common stock and the public
owns the rest as a result of the IPO.

   On April 12, 1999, the GM Board of Directors approved the complete separation
of Delphi  principally  by means of a tax-free  spin-off to holders of GM $1-2/3
common stock. To effect the spin-off of Delphi, the GM board declared a dividend
on GM $1-2/3  common stock  consisting  of  approximately  80.1%  of  the Delphi
outstanding common stock, payable on May 28, 1999 to holders of record as of May
25, 1999.  GM intends to  contribute  the  remaining  approximately  2.2% of the
Delphi  common  stock  owned  by  it  to  a  voluntary  employees'   beneficiary
association trust for GM's U.S. hourly retirees if GM receives confirmation from
the Internal  Revenue Service (IRS) that such  contribution  will not affect the
tax-free  status  of the  spin-off  of  Delphi.  If GM does not  receive  such a
confirmation  from the IRS on a timely basis, the remaining shares of the Delphi
common stock owned by GM will be distributed to the holders of the $1-2/3 common
stock as part of the spin-off.

2. BASIS OF PRESENTATION

   General--The consolidated financial statements included in this report should
be read in  conjunction  with our  consolidated  financial  statements and notes
thereto  included  in our  1998  Annual  Report  on Form  10-K  filed  with  the
Securities and Exchange Commission.

   Effective  January 1, 1999, the assets and liabilities of the Delphi business
sector were  transferred to Delphi and its  subsidiaries  in accordance with the
terms of a master  separation  agreement to which Delphi and GM are parties (the
"Separation Agreement"). The consolidated financial statements as of and for the
three months ended March 31, 1999 and the December 31, 1998 consolidated balance
sheet give effect to the terms of the  Separation  Agreement.  The  consolidated
statement  of income and cash flows for the three  months  ended  March 31, 1998
reflect the  historical  results of operations  and cash flows of the businesses
that were considered part of the Delphi business sector during that period. As a
result,  such 1998  financial data do not reflect the many  significant  changes
that  occurred in the  operation  and funding of Delphi in  connection  with the
Separation and the IPO during 1999.

   All intercompany  transactions  and balances  between Delphi  businesses have
been eliminated.  In the opinion of management,  all adjustments,  consisting of
only normal recurring items,  which are necessary for a fair  presentation  have
been included. The results for interim periods are not necessarily indicative of
results which may be expected from any other interim period or for the full year
and  may  not  necessarily  reflect  the  consolidated  results  of  operations,
financial  position  and cash  flows of Delphi in the  future or that would have
occurred in the past had Delphi been a separate,  stand-alone  entity during the
periods presented.


                                       6



   1998 Pro Forma Financial Information--For comparative purposes, the following
financial  data has been adjusted to give effect to the IPO and the terms of the
Separation Agreement,  exclusive of terms relating to the transfer of the assets
and  liabilities  to Delphi,  as such terms were  considered  in  preparing  the
December 31, 1998 historical consolidated balance sheet.

   The pro forma condensed  consolidated balance sheet data has been prepared as
if the  transactions  described below and the IPO occurred on December 31, 1998.
The pro forma condensed  consolidated statement of income data has been prepared
as if the  Separation  and the IPO had taken  place on January 1, 1998.  The pro
forma condensed  consolidated  balance sheet and statement of income data do not
purport to project  our  financial  position  or results of  operations  for any
future date. The pro forma adjustments are based upon available  information and
certain  assumptions  that we currently  believe are  reasonable.  The pro forma
condensed consolidated balance sheet and statement of income data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of  Operations,"  appearing  elsewhere in this report as well as our
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.

           Unaudited Pro Forma Condensed Consolidated Statement Income
                    For The Three Months Ended March 31, 1998
                                  (in millions)

                                                Historical Adjustments Pro Forma
                                                ---------- ----------- ---------
Net sales:
   General Motors and affiliates                  $ 6,105               $ 6,105
   Other customers                                  1,518                 1,518
                                                  -------               -------
     Total net sales                                7,623                 7,623
Less operating expenses:
   Cost of sales, excluding items listed below      6,789     $ (62) (1)  6,727
   Selling, general and administrative                300        (4) (1)
                                                                 38  (2)    334
   Depreciation and amortization                      200                   200
                                                  -------   --------    -------
     Total operating expenses                       7,289       (28)      7,261
                                                  -------   --------    -------
Operating income                                      334        28         362
Less interest expense                                  64                    64
Other income, net                                      79                    79
                                                  -------   --------    -------
Income before income taxes                            349        28         377
Income tax expense                                    113        10  (3)    123
                                                  -------   --------    --------
Net income                                        $   236   $    18     $   254
                                                  =======   ========    =======







                                       7


            Unaudited Pro Forma Condensed Consolidated Balance Sheet
                             As of December 31, 1998
                                  (in millions)

                                             Historical  Adjustments Pro Forma
                                             ----------  ----------- ---------
         ASSETS

Current assets:
 Cash and marketable securities             $  1,000    $ 1,621  (4)
                                                         (2,100) (5)
                                                          3,141  (6)
                                                         (1,600) (7)   $  2,062
Accounts receivable, net:
   General Motors and affiliates               2,236      2,100  (5)
                                                         (1,600) (6)
                                                          1,600  (7)      4,336
   Other customers                               977                        977
Inventories, net                               1,770                      1,770
Deferred income taxes                            285                        285
Prepaid expenses and other assets                137                        137
                                             -------     -------       ---------
     Total current assets                      6,405      3,162           9,567
Property, net                                  4,965                      4,965
Deferred income taxes                          2,813                      2,813
Other assets                                   1,323                      1,323
                                             -------     -------       ---------
Total assets                                $ 15,506    $ 3,162        $ 18,668
                                            ========    ========       =========

         LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current portion of
     long-term debt                         $    359                   $    359
Accounts payable:
     General Motors and affiliates                89                         89
     Other suppliers                           2,171                      2,171
Accrued liabilities                            1,438                      1,438
                                            --------   ---------       ---------
     Total current liabilities                 4,057                      4,057
Long-term debt, including intracompany note
   payable to General Motors                   3,141   $ (3,141) (6)
                                                          3,141  (6)      3,141
Pension benefits                               2,180                      2,180
Postretirement benefits and other than
   pensions                                    4,573                      4,573
Other liabilities                              1,546                      1,546
                                            --------     -------       ---------
     Total liabilities                        15,497        --           15,497
                                           ---------   ---------       ---------
Equity:
Common Stock                                    --            1   (4)
                                                              5   (8)         6
Additional paid in capital                      --        1,620   (4)
                                                          1,613   (8)     3,233
General Motors' net investment                    77      1,541   (6)
                                                         (1,618)  (8)      --
Accumulated translation adjustments              (68)       --              (68)
                                              -------    -------       ---------

     Total equity                                  9      3,162           3,171
                                             --------    -------       ---------
Total liabilities and equity                $ 15,506    $ 3,162        $ 18,668
                                             ========   ========       =========



                                       8


         The following pro forma  adjustments  were made to reflect the terms of
the Separation Agreement and the IPO:

         (1)Delphi and General  Motors have  entered into  agreements  regarding
            certain employee benefit  obligations.  The pro forma adjustment for
            the three months ended March 31, 1998 is  summarized  as follows (in
            millions):

                   Pension related costs                      $   53
                   Postretirement benefits other than pension   (119)
                                                              -------
                              Total                           $  (66)
                                                              =======


                   Portion attributable to cost of sales      $  (62)
                                                              =======

                   Portion attributable to selling, general
                   and administrative                         $   (4)
                                                              =======

         (2)Reflects   the   estimated   incremental   selling,    general   and
            administrative   costs   associated  with  operating   Delphi  as  a
            stand-alone  publicly traded company.  The pro forma  adjustment for
            the three months ended March 31, 1998 is as follows (in millions):

                   Incremental insurance and risk management  $    9
                   Incremental corporate costs*                   12
                   Taxes other than income                        13
                   Other                                           4
                                                              ------
                               Total                          $   38
                                                              ======

              * Incremental  corporate  costs include  additional  personnel and
              systems  costs  required  to  operate  independently  and  reflect
              transitional  service  arrangements  with General  Motors at terms
              provided in the Separation Agreement.  Other costs include certain
              sales tax expenses associated with the Separation.

         (3)Income taxes were  determined in accordance  with the  provisions of
            SFAS No.  109,  "Accounting  for Income  Taxes."  Once  Delphi is no
            longer included in GM's consolidated income tax return,  Delphi will
            no longer benefit from GM's consolidated income tax environment.  As
            a  result,  Delphi  expects  effective  income  tax  rates in future
            periods  generally to be higher than Delphi's  historical  effective
            income tax rates. For purposes of this pro forma  presentation only,
            adjustments  necessary  to record  the  income tax effect of the pro
            forma  adjustments  assume a combined  federal and state  income tax
            rate of 38%.

         (4)Reflects the net  proceeds  from the sale of  100,000,000  shares of
            common  stock in the IPO at a price of  $17.00  per  share.  The IPO
            proceeds were used for general corporate purposes, including working
            capital  requirements  that  have  been  impacted  by the  change in
            General Motors accounts  receivable  payment terms described in note
            (5) below.

         (5)Reflects  the  change in  payment  terms for  intracompany  accounts
            receivable  from General Motors in accordance  with the terms of the
            Separation Agreement. Such payment terms, which generally called for
            payment in the month following shipment by Delphi,  were modified to
            require  payment by  General  Motors on the second day of the second
            month following shipment by Delphi.


                                       9


         (6)Reflects the settlement of certain intracompany  accounts receivable
            from GM with the  intracompany  note  payable  to GM. On  January 1,
            1999,  immediately  prior to the  transactions  contemplated  by the
            Separation Agreement,  certain intracompany accounts receivable from
            GM,  of about  $1.6  billion,  were  settled  with the $3.1  billion
            outstanding  intracompany  note  payable  to GM with the  difference
            resulting  in an increase in GM's net  investment  in Delphi.  It is
            expected that during the first half of 1999, Delphi will finance its
            operations with third party funding of up to $3.1 billion.

         (7)Reflects the required  adjustment,  subsequent to the  settlement of
            intracompany  accounts  receivable  described in note (6) above,  to
            adjust  cash and  accounts  receivable  balances  to levels that are
            indicative of amounts associated with ongoing operations.

         (8)Reflects the adjustment to equity to reclassify  GM's net investment
            as common stock and additional paid-in capital.

   Earnings Per Share

   The  historical  basic  earnings per share amounts were  computed  using only
weighted average shares outstanding for each respective period. Diluted earnings
per share also  considers  the  impact of all  potentially  dilutive  securities
during the periods  presented  unless the inclusion  would have an  antidilutive
effect.   Actual  weighted  average  shares   outstanding  used  in  calculating
historical basic and diluted earnings per share were:

                                                   Three Months ended
                                                       March 31,
                                                    1999        1998
                                                    ----        ----
                                                    (in thousands)
            Weighted average shares outstanding   520,555     465,000
            Effect of dilutive securities             180        --
                                                  -------     -------
            Diluted shares outstanding            520,735     465,000
                                                  =======     =======

   If the 100 million  shares  issued in the IPO were assumed to be  outstanding
since January 1, 1998, the weighted average shares  outstanding  would have been
565 million  during the three  months  ended  March 31,  1999 and 1998.  On this
basis,  basic and diluted earnings per share would have been $0.50 for the three
months ended March 31, 1999. On this same basis,  basic and diluted earnings per
share, after considering the pro forma impact of the terms of Separation,  would
have been $0.45 for the three months ended March 31, 1998.

3. INVENTORIES, NET

   Inventories, net consisted of:

                                                      March 31,     December 31,
                                                        1999            1998  
                                                      ---------     ------------
                                                            (in millions)
      Productive material, work-in-process and
        supplies                                      $ 1,726         $ 1,910
      Finished goods                                      206             253
                                                      --------        --------
         Total inventories at FIFO                      1,932           2,163
      Less allowances to adjust the carrying value
        of certain inventories to LIFO                   (393)           (393)
                                                      --------        --------
         Total inventories, net                       $ 1,539         $ 1,770
                                                      ========        ========



                                       10

<TABLE>
<CAPTION>



4. STOCKHOLDERS' EQUITY
Changes in stockholders' equity for the three months ended March 31, 1999 were:

                                                            Additional             Accumulated         General           Total
                                            Common Stock     Paid in    Retained   Translation         Motors'       Stockholders'
                                          Shares    Amount   Capital    Earnings   Adjustments     Net Investment        Equity
                                          ------    ------   -------    --------   -----------     --------------        ------
                                                                         (in millions)
<S>                                         <C>     <C>      <C>        <C>         <C>               <C>               <C>

Balance at January 1, 1999                                                           $ ( 68)          $   77            $    9
Stock split                                 465     $    5                                                (5)              --
Settlement of intracompany balances(Note 2)                                                            1,541             1,541
Reclassify GM's net investment                               $ 1,613                                  (1,613)              --
Issuance of common shares                   100          1     1,620                                                     1,621
Net income                                                              $   284                                            284
Foreign currency translation
   adjustments                                                                         (104)                              (104)
                                          ------    ------   -------    -------     --------          -------         ---------
Balance at March 31, 1999                   565     $    6   $ 3,233    $   284     $  (172)          $  --           $  3,351
                                          ======    ======   =======    =======     ========          =======         =========

</TABLE>






                                       11


5. COMPREHENSIVE INCOME

   Delphi's comprehensive income was:

                                                      Three Months ended
                                                           March 31,
                                                       1999         1998
                                                       ----         ----
                                                         (in millions)   
Net income                                            $ 284        $ 236
Other comprehensive (loss) income--foreign currency
   translation adjustments, net of tax                 (104)          14
                                                      ------       -----
Comprehensive income                                  $ 180        $ 250
                                                      ======       =====

6. SEGMENT REPORTING

   Selected information regarding Delphi's product sectors is as follows:

<TABLE>
<CAPTION>

                                                Safety
                             Electronics &    Thermal &      Dynamics
                                Mobile        Electrical        &
                             Communication   Architecture   Propulsion   Other(a)   Total
                             -------------   ------------   ----------   --------   -----
<S>                             <C>            <C>           <C>          <C>      <C>
For the three months ended:
March 31, 1999                                       (in millions)
   Net sales to GM and
     affiliates                 $ 1,090        $ 1,937       $  2,826     $  --    $ 5,853
   Net sales to other                                                   
     customers                      187            723            706        --      1,616
   Inter-sector net sales            76             53              2      (131)        --
                                -------        -------        -------     ------   -------
     Total net sales            $ 1,353        $ 2,713       $  3,534     $(131)   $ 7,469
                                =======        =======       ========     ======   =======
Operating income                $   158        $   216       $    124     $ (41)   $   457
                                =======        =======       ========     ======   =======


March 31, 1998                                                          
   Net sales to GM and                                                  
     affiliates                 $ 1,068        $ 2,303        $ 2,734     $  --    $ 6,105
   Net sales to other                                                   
     customers                      151            737            630        --      1,518
   Inter-sector net sales            64             50              2      (116)        --
                                -------        -------        -------     ------   -------
     Total net sales            $ 1,283        $ 3,090       $  3,366     $(116)   $ 7,623
                                =======        =======       ========     ======   =======
Operating income (b)            $   139        $   210       $     73     $ (88)   $   334
                                =======        =======       ========     ======   =======

</TABLE>


             (a)  Other includes  activity not allocated to the product  sectors
                  and the elimination of inter-sector transactions.

             (b)  1998 historical operating income does not reflect the  
                  reductions in employee benefit costs and higher other costs as
                  a result of the  Separation  Agreement  (see Note 2).  After 
                  giving effect to the terms of the Separation  Agreement,  our 
                  operating income by product sector would have been:

<TABLE>
<CAPTION>

                                                Safety
                             Electronics &    Thermal &      Dynamics
                                Mobile        Electrical        &
                             Communication   Architecture   Propulsion   Other(a)   Total
                             -------------   ------------   ----------   --------   -----
<S>                             <C>            <C>           <C>          <C>      <C>                
         Operating income       $   129        $   211       $     97     $ (75)   $   362
</TABLE>


                                       12




7. COMMITMENTS AND CONTINGENCIES

     Delphi is from time to time  subject to various  legal  actions  and claims
incidental to its  business,  including  those  arising out of alleged  defects,
breach  of  contracts,   product  warranties,   employment-related  matters  and
environmental  matters.  Litigation  is subject to many  uncertainties,  and the
outcome of individual litigated matters is not predictable with assurance. After
discussions  with counsel,  it is the opinion of management  that the outcome of
such  matters  will not  have a  material  adverse  impact  on the  consolidated
financial position, results of operations or cash flows of Delphi.

8. SUBSEQUENT EVENT

     On May 4, 1999, we completed a public offering of unsecured debt securities
totaling $1.5 billion with maturities of five years, ten years and thirty years.
The offering  consists of $500 million of securities  bearing interest at 6.125%
and maturing on May 1, 2004, $500 million of securities bearing interest at 6.5%
and maturing on May 1, 2009, and $500 million of securities  bearing interest at
7.125% and  maturing on May 1, 2029.  We intend to use the  proceeds of the debt
offering for general  corporate  purposes,  including  the  repayment of amounts
currently  outstanding  under  the long term  portion  of our  revolving  credit
facilities.  As a result of the term debt offering,  the $4.9 billion previously
available under our revolving  credit  facilities was reduced to $3.4 billion in
available funds, generally split between 364-day and five year tranches.

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                            CONDITION AND RESULTS OF OPERATIONS

Overview

     1999 marks a new  beginning  for our  company.  As we  embarked  on our new
beginning,  we  brought  with us many  years of  experience  and  innovation  in
supplying  vehicle  manufacturers  from around the world. The 1999 first quarter
included  several  significant  highlights,  including the  commencement  of the
independent operations of Delphi Automotive Systems Corporation and a successful
initial public  offering that  generated net proceeds of about $1.6 billion.  We
posted strong  operating  results and improved  liquidity  during the 1999 first
quarter while continuing to take cost out of our operations  through  reductions
in  material  and  manufacturing  costs  and  the  realignment  of  our  product
portfolio.  In addition,  we were awarded new contracts  with  customers such as
Volkswagen,  Volvo,  Isuzu and GM. These new contracts are  indicative of non-GM
customer  acceptance of products and technology  from an independent  Delphi and
demonstrates  our largest  customer's  confidence in our ability to innovate and
provide product differentiation.

     In an action that pushes us forward to realize our business objectives,  on
April 12, 1999, the General Motors (GM) Board of Directors approved the complete
separation  of Delphi  from GM by means of a tax-free  spin-off  during the 1999
second quarter. Our complete separation from GM will allow Delphi to immediately
begin to execute a business  strategy  aimed at  maximizing  shareholder  value.
Specifically, the separation provides us with opportunities to increase sales to
non-GM  customers,  strengthen  our  ability to partner  and  acquire  strategic
businesses  and  continue to improve  relations  with our  employees  around the
world.

     Overall, we are off to a good start and we are focused on our customers and
meeting our near and long term business objectives.

Results of Operations

     The following  management's  discussion and analysis of financial condition
and results of  operations  (MD&A) should be read in  conjunction  with the MD&A
included in our Annual  Report on Form 10-K for the fiscal  year ended  December
31, 1998 and the 1998 pro forma financial  information included in Note 2 to the
March 31, 1999 financial statements. To facilitate analysis, the following table
sets forth the  consolidated  statement  of income data as a  percentage  of net
sales, for each of the periods presented:

                                             Three Months ended March 31,
                                             ----------------------------
                                                        1998         1998      
                                             1999     Pro forma     Actual    
                                             ----     ---------     ------    
      Net Sales                             100.0%      100.0%      100.0%    
      Less operating expenses:                                    
        Cost of sales                        85.6       88.3         89.1     
        Selling, general and administrative   5.1        4.4          3.9     
        Depreciation and amortization         3.2        2.6          2.6     
                                            -----      -----        -----     
      Operating income                        6.1        4.7          4.4     
      Less interest expense                   0.3        0.8          0.8     
      Other income, net                       0.3        1.0          1.0     
                                            -----      -----        -----     
      Income before income taxes              6.1        4.9          4.6     
      Income tax expense                      2.3        1.6          1.5     
                                            -----      -----        -----     
      Net income                              3.8%       3.3%         3.1%    
                                            =====      =====        =====     

   Three months ended March 31, 1999 versus three months ended March 31, 1998

     Net  Sales.  Consolidated  net sales and  changes  in net sales by  product
sector and in total for the three months ended March 31, 1999 and 1998 were:

<TABLE>
<CAPTION>

                                                 Three Months Ended
                                                      March 31,            Change
                                                 ------------------    ---------------  
           Product Sector                          1999       1998        $        %
           --------------                          ----       ----      ----     ----
                                                           (dollars in millions)

<S>                                              <C>        <C>        <C>        <C> 
     Electronics & Mobile Communication          $ 1,353    $ 1,283    $   70     5.5%
     Safety, Thermal & Electrical Architecture     2,713      3,090      (377)   (12.2)
     Dynamics & Propulsion                         3,534      3,366       168     5.0
     Eliminations                                   (131)      (116)      (15)    n/a
                                                 -------    --------   -------   -----
      Consolidated net sales                     $ 7,469    $ 7,623    $ (154)   (2.0)%
                                                 ========   ========   =======   =====
</TABLE>


   Net sales reflect growth in sales revenue from ongoing  operations and strong
North American sales,  offset by the impact of businesses divested in late 1998,
a decline in South American sales and continued price pressures. The sale of our
seating,  lighting,  coil spring and several smaller businesses during late 1998
primarily  impacted  our Safety,  Thermal and  Electrical  Architecture  product
sector, while price reductions, totaling about $103 million, impacted all of our
product sectors.  After considering the divested businesses,  which had sales of
about $495 million during the first three months of 1998, our  consolidated  net
sales for the first three months of 1999 increased  about 5% over the comparable
period of 1998.  Our non-GM  sales  increased  about 12% during the first  three
months of 1999,  after  adjusting to eliminate the 1998 sales of our  businesses
divested in 1998.


                                       14


   Operating  Income.  Operating  income was $457  million  for the first  three
months of 1999 compared to $334 million for the first three months of 1998.  Our
operating  income,  as reported  for 1998,  does not reflect the  reductions  in
employee  benefit  costs and higher  other  costs as a result of our  separation
agreement with GM (the "Separation Agreement"). After giving effect to the terms
of the  Separation  Agreement  (see  Note 2 to our  financial  statements),  our
operating income by product sector and in total was:

<TABLE>
<CAPTION>

                                                 Three Months Ended
                                                      March 31,            Change
                                                 ------------------    -------------  
           Product Sector                          1999     1998       $       %
           --------------                          ----     ----      ---     ---
                                                       (dollars in millions)                                            
<S>                                               <C>      <C>      <C>      <C>  
     Electronics & Mobile Communication           $ 158    $ 129    $  29    22.5%
     Safety, Thermal & Electrical Architecture      216      211        5     2.4
     Dynamics & Propulsion                          124       97       27    27.8
     Others                                         (41)     (75)      34     n/a
                                                  ------   ------   -----   -----
      Total operating income                      $ 457    $ 362    $  95    26.2%
                                                  ======   ======   =====    ====
</TABLE>

     Our gross margin was 14.4% for the first three months of 1999 compared to a
pro  forma  gross  margin  of 11.8%  for the  comparable  period  of  1998.  The
improvement  reflects the results of our continuing  cost reduction  efforts and
lean  manufacturing  initiatives  that are  being  implemented  in  response  to
industry  pricing  pressures.  In fact,  each of our  product  sectors  achieved
material and manufacturing cost savings which, in the aggregate,  exceeded total
price   reductions   during  the  first  three  months  of  1999.  Gross  margin
improvements   were  partially   offset  by  increased   selling,   general  and
administrative and depreciation and amortization costs. The increase in selling,
general  and  administrative  expenses,  compared  to 1998  pro  forma  amounts,
primarily  represents  incremental  costs required as a result of our efforts to
pursue  business  with non-GM  customers and expand our global  operations.  The
increase in depreciation and amortization  reflects incremental costs associated
with our growth initiatives and the related capital requirements associated with
our lean manufacturing initiative.

     In response to  recessionary  conditions  and the related  declining  sales
volume  in  South  America,  we  have  reduced  the  size of our  South  America
organization and idled or sold selected manufacturing facilities in the area. In
addition,  we are  attempting  to boost  export  sales out of the region to take
advantage of favorable  exchange  rates.  Although year to date 1999 results are
unfavorable  in this  region,  we  believe  South  America  remains  a market of
significant long-term growth potential.

     Net Income.  Net income  totaled $284 million for the first three months of
1999  compared to $236 million for the three  months  ended March 31, 1998.  For
comparative  purposes,  after  giving  effect  to the  terms  of the  Separation
Agreement,  our pro forma net  income for the first  three  months of 1998 would
have been $254  million.  Interest  expense  decreased  by $40  million  as 1999
average  outstanding debt balances and interest rates were favorable compared to
1998.  Our  effective  income tax rate  increased  to 38.0% for the first  three
months  of 1999  compared  to a pro forma  effective  rate of 32.6%  during  the
comparable  period of 1998.  The increased  effective  income tax rate primarily
reflects the impact of our separation  from GM and resulting loss of certain tax
credits which were previously available to us.

     Earnings per share.  Earnings per share calculations are complicated by the
changes in shares  outstanding  related to the steps involved in full separation
from GM. Currently,  we have 565 million shares outstanding,  reflecting the 100
million shares issued in our initial  public  offering in February 1999, and 465
million shares owned by GM. Under generally accepted accounting principles,  the
shares issued in connection with the initial public offering of our common stock
are excluded from the 1998  calculation  of earnings per share and  fractionally
included  in the 1999  calculation.  This  results in  weighted  average  shares
outstanding  of 521 million in 1999, or basic and diluted  earnings per share of
$0.55,  and 465 million  weighted  average  shares in 1998, or basic and diluted
earnings per share of $0.51.


                                       15


   Because of the change in shares  outstanding  since 1998  resulting  from the
steps involved in our separation  from GM, we believe that the current number of
shares outstanding,  565 million,  will be widely used in computing our earnings
per share for comparative  purposes.  On this basis, first quarter 1999 earnings
of $284 million and pro-forma  1998 earnings of $254 million would have resulted
in basic and diluted earnings per share of $0.50 for 1999 and $0.45 for 1998.

Liquidity and Capital Resources

   Liquidity

   Our net  liquidity,  measured as cash and  marketable  securities  less total
debt,  was  $(0.8)  billion  at March 31,  1999  compared  to $(2.5)  billion at
December 31, 1998. The ratio of our total debt to total capital,  which consists
of total debt  plus stockholders' equity, was  36% at March 31, 1999 and 100% at
December 31,  1998.  If our  Separation  from GM and  the  IPO  had occurred  on
December 31, 1998, the pro forma net liquidity and  ratio of total debt to total
capital  would  have  been  $(1.4)  billion  and  52%  at   December  31,  1998,
respectively.  The improvements  in our net  liquidity  and ratio of total  debt
to total  capital, after  adjusting for the impact of the  Separation  Agreement
and our  initial public  offering,  resulted  from  strong cash flows  generated
during the first  quarter of 1999. See "--Liquidity and Capital  Resources--Cash
Flows". We expect that our improved net liquidity position allows for continuing
pursuit of our objectives  for pension  funding,  while  preserving  flexibility
for strategic growth initiatives.

   Extension of Payment Terms

   In accordance with our supply agreement with GM,  effective  January 1, 1999,
payment terms for our accounts  receivable  were modified such that payments are
generally due to us on the second day of the second month  following the date of
shipment. These modified payment terms are consistent with those GM is currently
in the process of introducing to all of its  suppliers.  Previous  payment terms
generally  required  GM to  make  accounts  receivable  payments  in  the  month
following  shipment by Delphi.  Overall,  the change in payment terms  increased
accounts  receivable  by about  $2.1  billion in 1999.  While we are  seeking an
extension  of payment  terms with our  suppliers  over time,  we  generally  pay
suppliers  on the  25th  day of the  month  following  the  date a  shipment  is
received.  The  difference  in the terms for  accounts  receivable  and accounts
payable results in a monthly  short-term cash flow gap. During the first quarter
of 1999, we financed the short-term  cash-flow gap through borrowings  under our
revolving credit facilities.

   Debt Capitalization and Available Financing Sources

   Immediately  prior  to  the  transactions   contemplated  by  the  Separation
Agreement,   approximately  $1.6  billion  of  certain   intracompany   accounts
receivable from GM were offset with a $3.1 billion outstanding intracompany note
payable  to GM  with  the  difference  resulting  in an  increase  in  GM's  net
investment in Delphi.


                                       16


   In January 1999, we entered into two financing  arrangements with a syndicate
of lenders  providing  for an aggregate  of $4.9 billion in available  revolving
credit  facilities.  In general,  the facilities  provided up to $4.9 billion of
available  credit to be used for general  corporate  purposes through January 3,
2000, after which $1.5 billion would be available through January 3, 2004. As of
March 31, 1999,  borrowings  under our third party credit  facilities were about
$1.6 billion.  On May 4, 1999, we completed a public  offering of unsecured debt
securities  totaling  $ 1.5  billion  in five  year,  ten year and  thirty  year
tranches. The proceeds are being used for general corporate purposes,  including
payment  of amounts  outstanding  under the long term  portion of our  revolving
credit facilities.  As a result of the unsecured debt issuance, the $4.9 billion
previously  available under of our revolving credit  facilities  was  reduced to
$3.4 billion in available  funds,  generally split between 364-day and five year
tranches.  See Note 8 to our  consolidated  financial  statements for additional
information.

Cash Flows

   Operating Activities.  Net cash used in operating activities was $2.8 billion
for the first three  months of 1999 compared  to net cash  provided by operating
activities of $249 million for the comparable period of 1998. The use of cash in
the 1999 first quarter  reflects the settlement of certain  accounts  receivable
with GM and the change in  payments  terms in  accordance  with the terms of the
Separation  Agreement.  Net cash  provided  by  operating  activities  for 1999,
excluding  the impact of the  settlement  of accounts  receivable  and change in
payment  terms would have been $864  million.  Cash  generated  during the first
quarter of 1999 reflects our strong earnings and reductions in inventory  levels
resulting from our lean manufacturing initiatives and the timing of payments for
accounts payable and certain accrued expenses.

   Investing  Activities.  Cash flows used in investing  activities totaled $166
million  and $298  million for the three  months  ended March 31, 1999 and 1998,
respectively.  The  decrease  in cash  used in  investing  activities  primarily
reflects  decreased  capital  expenditures  due to the timing of certain capital
programs and higher proceeds from asset disposals.

   Financing  Activities.  Net cash  provided by financing  activities  was $3.1
billion  and $52  million  for the three  months  ended March 31, 1999 and 1998,
respectively.  Cash provided by financing  activities for the first three months
of 1999 include net borrowings on our short term and long term revolving  credit
facilities  and the proceeds from our initial public  offering in February.  The
proceeds  from our  initial  public  offering  were used for  general  corporate
purposes,  including  temporary  repayment  of amounts  due under our  revolving
credit facilities.

Year 2000

   During the first three months of 1999,  we continued  our efforts to minimize
the risk of disruption from the Year 2000 issue. Our overall plan to address the
Year 2000  problem is  described  more fully in our 1998  Annual  Report on Form
10-K, and the following is an update of the  information  included  therein.  We
have substantially completed the remediation,  testing and implementation of our
critical  systems.  During  the first  quarter,  we  continued  to  address  the
remediation of other systems on a prioritized basis, including implementation of
new  enterprise  software  which is scheduled for  completion  later in 1999. In
addition,  we are focusing on readiness  testing of our integrated  systems.  We
have  continued to work with our  suppliers  and GM in our  supplier  assessment
program including our own on-site review of suppliers  considered to be critical
to Delphi.  These supplier assessment efforts have been substantially  completed
with respect to our critical supplier sites. We also expect that our contingency
planning  efforts will address any critical  suppliers that we still identify as
being at high risk of  encountering  Year 2000 problems  upon  completion of the
supplier assistance program.

   The cost of our Year 2000  program is being  expensed  as  incurred  with the
exception of  capitalizable  replacement  hardware and computer  software  costs
developed for internal use. Total incremental spending by Delphi is not expected
to be material to our company's operations,  liquidity or capital resources.  We
incurred  about $14 million of Year 2000  expenses  during the first  quarter of
1999.  Delphi  currently  expects its total Year 2000  spending to be about $106
million, which will be funded from operations.


                                       17


   We do  not  currently  anticipate  that  we  will  experience  a  significant
disruption of our business as a result of the Year 2000 issue. However, there is
still  uncertainty  about the  broader  scope of the Year  2000  issue as it may
affect Delphi and third parties,  including our customers,  that are critical to
Delphi's  operations.  If we are  unable to  complete  our  remedial  actions as
described above and are unable to implement  adequate  contingency  plans in the
event that problems are encountered, there could be a material adverse effect on
our business, results of operations or financial condition.

Forward-Looking Statements

   The Private  Securities  Litigation Reform Act of 1995 (the "Act") provides a
safe harbor for  forward-looking  statements  made by or on behalf of the Delphi
Automotive Systems Corporation.  Delphi and its representatives may periodically
make written or oral statements that are "forward-looking," including statements
included in this  report and other  filings  with the  Securities  and  Exchange
Commission  and in reports to our  stockholders.  All  statements  which address
operating performance,  events or developments that we expect or anticipate will
occur in the future,  including  statements  relating to volume growth,  awarded
sales contracts and earnings per share growth or statements  expressing  general
optimism about future operating results, are forward-looking  statements.  These
statements are made on the basis of  management's  views and  assumptions;  as a
result,   there  can  be  no  assurance  that  management's   expectations  will
necessarily come to pass. A list of factors which could impact future events and
performance is included in the Delphi Automotive Systems Corporation 1998 Annual
Report on Form 10-K filed with the Securities and Exchange Commission.










                                       18



                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

   We are  involved  in  routine  litigation  incidental  to the  conduct of our
business. We do not believe that any of the litigation to which we are currently
a party  will have a  material  adverse  effect  on our  business  or  financial
condition.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

Exhibit
Number            Exhibit Name
--------------------------------------------------------------------------------

10 (a)            Change in Control Agreement between Delphi and certain of its
                  officers and other executives

27                Financial data schedule (for SEC information only)

(b) REPORTS ON FORM 8-K

      None.








                                       19



                                    SIGNATURE

   Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                    DELPHI AUTOMOTIVE SYSTEMS CORPORATION
                                                 (Registrant)


May 4, 1999                                 /s/ Paul R. Free
-----------                                 ------------------------------------
                                            Paul R. Free, Chief Accounting
                                            Officer and Controller





                                       20