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 June 30, 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 X . No .

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


<PAGE>



                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                                      INDEX

                                                                      Page No.


Part I-Financial Information

        Item 1.  Financial Statements

               Consolidated Statements of Income (Unaudited) for the
                three and six months ended June 30, 1999 and 1998        3


               Consolidated Balance Sheets at June 30, 1999 (Unaudited)
                 and December 31, 1998                                   4

               Consolidated Statements of Cash Flows (Unaudited) for
                 the six months ended June 30, 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                    14

Part II-Other Information

        Item 1.  Legal Proceedings                                      20

        Item 5.  Other Information                                      20

        Item 6.  Exhibits and Reports on Form 8-K                       20

Signature                                                               21

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

Exhibit 99  Press Release dated July 19, 1999                          n/a


<PAGE>



                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


                                      Three Months Ended    Six Months Ended
                                           June 30,             June 30,
                                      1999          1998    1999        1998
                                      ----          ----    ----        ----
                                      (in millions, except per share amounts)
  Net sales:
   General Motors                   $  5,986   $  5,449  $  11,839  $  11,554
   Other customers                     1,697      1,592      3,313      3,110
                                    --------   --------  ---------  ---------
     Total net sales                   7,683      7,041     15,152     14,664
                                    --------   --------  ---------  ---------
  Less operating expenses:
   Cost of sales, excluding items
    listed below                       6,453      6,280     12,844     13,069
   Selling, general and administrative   394        367        778        667
   Depreciation and amortization         207        283        444        483
                                    --------   --------  ---------  ---------
     Total operating expenses          7,054      6,930     14,066     14,219
                                    --------   --------  ---------  ---------
  Operating income                       629        111      1,086        445
  Less interest expense                   36         67         60        131
  Other income, net                       42         55         67        134
                                    --------   --------  ---------  ---------
  Income before income taxes             635         99      1,093        448
  Income tax expense                     241         16        415        129
                                    --------   --------  ---------  ---------
  Net income                        $    394   $     83  $     678  $     319
                                    ========   ========= =========  =========
  Earnings per share (Note 2):
   Basic                            $   0.70   $   0.18  $    1.25  $    0.69
                                    ========   ========  ========= ==========

   Diluted                          $   0.69   $   0.18  $    1.25  $    0.69
                                    ========   ========  =========  =========

                  See notes to consolidated financial statements.



<PAGE>


                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                           CONSOLIDATED BALANCE SHEETS

                                                      June 30,
                                                        1999        December 31,
                                                    (Unaudited)         1998
                                                    -----------     ------------
                                                            (in millions)
                              ASSETS
      Current assets:
        Cash and cash equivalents                   $     1,232     $      995
        Other marketable securities                          14              5
                                                    -----------     ----------
          Total cash and marketable securities            1,246          1,000
      Accounts receivable, net:
        General Motors                                    4,419          2,236
        Other customers                                   1,490            977
      Inventories, net (Note 3)                           1,454          1,770
      Deferred income taxes                                 271            285
      Prepaid expenses and other assets                      77            137
                                                    -----------     ----------
          Total current assets                            8,957          6,405

      Property, net                                       4,919          4,965
      Deferred income taxes                               2,871          2,813
      Other assets                                        1,487          1,323
                                                    -----------     ----------
      Total assets                                  $    18,234     $   15,506
                                                    ===========     ==========

            LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities:
        Notes payable and current portion of
          long-term debt (Note 4)                   $       183     $      359
        Accounts payable                                  2,703          2,260
        Accrued liabilities                               1,853          1,438
                                                    -----------     ----------
          Total current liabilities                       4,739          4,057

      Long-term debt, including intracompany note
        payable to General Motors in 1998 (Note 4)        1,647          3,141
      Pension benefits (Note 5)                           1,763          2,180
      Postretirement benefits other than pensions
        (Note 5)                                          4,818          4,573
      Other liabilities                                   1,577          1,546
                                                    -----------     ----------
          Total liabilities                              14,544         15,497

      Stockholders' equity (Note 6):
        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 and 465
          million shares outstanding, respectively            6             --
        Additional paid in capital                        3,233             --
        Retained earnings                                   638             --
        General Motors' net investment                       --             77
        Accumulated translation adjustments                (187)           (68)
                                                    -----------     ----------
          Total stockholders' equity                      3,690              9
                                                    -----------     ----------
        Total liabilities and stockholders' equity  $    18,234     $   15,506
                                                    ===========     ==========

                  See notes to consolidated financial statements.


<PAGE>




                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

                                                           Six Months Ended
                                                               June 30,
                                                           1999        1998
                                                           ----        ----
                                                             (in millions)
     Cash flows from operating activities:
      Net income                                          $  678     $  319
      Adjustments to reconcile net income to net cash
        used in operating activities:
        Depreciation and amortization                        444        483
      Changes in operating assets and liabilities:
         Accounts receivable, net                         (4,296)       (55)
         Inventories, net                                    316          6
         Prepaid expenses and other assets                   (65)        19
         Deferred income taxes                                15         90
         Accounts payable                                    443       (525)
         Accrued liabilities                                 385       (178)
         Other long-term liabilities (Note 5)               (203)      (574)
         Other                                              (144)        77
                                                          ------     ------
        Net cash used in  operating  activities           (2,427)      (338)
                                                          ------     ------
     Cash flows from investing activities:
      Capital expenditures                                  (493)      (609)
      Acquisition of marketable securities                   (53)      (518)
      Liquidation of marketable securities                    44        517
      Other                                                   80        (37)
                                                          ------     ------
        Net cash used in investing activities               (422)      (647)
                                                          ------     ------
     Cash flows from financing activities:
      Proceeds from issuance of common stock (Note 2)      1,621         --
      Borrowings from credit facilities and other debt     1,477         --
      Proceeds from issuance of debt securities (Note 4)   1,484         --
      Repayments of credit facilities and other debt
        (Note 4)                                          (1,484)        --
      Cash effect of assets and liabilities transferred
        to General Motors                                     --        998
                                                          ------     ------
        Net cash provided by financing activities          3,098        998
     Effect of exchange rate fluctuations on cash and cash
      equivalents                                            (12)       (14)
     Increase (decrease) in cash and cash equivalents        237         (1)
      Cash and cash equivalents at beginning of period       995        989
                                                          ------     ------
      Cash and cash equivalents at end of period          $1,232     $  988
                                                          ======     ======

                  See notes to consolidated financial statements.


<PAGE>



                      DELPHI AUTOMOTIVE SYSTEMS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. BACKGROUND

   Delphi Automotive Systems  Corporation  ("Delphi") is the world's largest and
most  diversified  supplier of  automotive  components,  integrated  systems and
modules to the automotive industry. We became an independent company during 1999
through a series of  transactions  (the  "Separation")  which are  described  in
further  detail  below.  We were  incorporated  in late  1998 as a wholly  owned
subsidiary of General Motors  Corporation  ("General Motors" or "GM").  Prior to
our  incorporation  we operated  our  business  for  several  years as a captive
component supplier.  The divestiture  occurred in two stages, the first of which
involved an offering to the public of 100 million  shares of Delphi's  $0.01 par
value common stock in February 1999 (the "IPO").  The second stage  involved the
distribution  of Delphi's  remaining  shares  owned by GM (the  "Spin-Off").  To
effect the Spin-Off, a dividend was declared on GM $1-2/3 par value common stock
payable on May 28, 1999 to holders of record as of May 25,  1999.  The  dividend
resulted in a distribution of about 452.6 million shares,  or 80.1%, of Delphi's
outstanding  common stock.  The remaining  12.4 million  shares owned by GM were
contributed on May 28, 1999 to a voluntary  employees'  beneficiary  association
trust for GM's U.S. hourly employees.

2. BASIS OF PRESENTATION

   General--The  consolidated financial statements and notes thereto 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 and six months ended June 30, 1999 and the December 31, 1998  consolidated
balance  sheet  give  effect  to the  terms  of the  Separation  Agreement.  The
consolidated  statements  of income for the three and six months  ended June 30,
1998  and  cash  flows  for the six  months  ended  June 30,  1998  reflect  the
historical  results of  operations  and cash flows of the  businesses  that were
considered part of GM's 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  our
separation from GM 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.

   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 arrangements 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  statement  of  income  data has been
prepared as if our separation  from GM and the IPO had taken place on January 1,
1998. 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 statement of income data and consolidated  balance
sheet 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 believed to be reasonable. The pro
forma  condensed  statement of income data and  consolidated  balance sheet 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.


<PAGE>


         Unaudited Pro forma Condensed Consolidated Statement of Income
                    For the Three Months Ended June 30, 1998

                                       Historical    Adjustments    Pro Forma
                                       ----------    -----------    ---------
                                                    (in millions)

     Net sales                         $  7,041                     $  7,041
     Less operating expenses:
      Cost of sales, excluding items
        listed below                      6,280     $   (62)(1)        6,218
      Selling, general, and
        administrative                      367          (4)(1)
                                                         38 (2)          401
      Depreciation and amortization         283                          283
                                       --------     -------         --------
        Total operating expenses          6,930         (28)           6,902
                                       --------     -------         --------
     Operating income                       111          28              139
     Less interest expense                   67                           67
     Other income, net                       55                           55
                                       --------     -------         --------
     Income before income taxes              99          28              127
     Income tax expense                      16          10 (3)           26
                                       --------     -------         --------
     Net income                        $     83     $    18         $    101
                                       ========     =======         ========


         Unaudited Pro forma Condensed Consolidated Statement of Income
                     For the Six Months Ended June 30, 1998

                                       Historical    Adjustments    Pro Forma
                                       ----------    -----------    ---------
                                                  (in millions)

     Net sales                         $ 14,664                     $ 14,664
     Less operating expenses:
      Cost of sales, excluding items
        listed below                     13,069     $  (124)(1)       12,945
      Selling, general, and
        administrative                      667          (8)(1)
                                                         76 (2)          735
      Depreciation and amortization         483                          483
                                       --------     -------         --------
        Total operating expenses         14,219         (56)          14,163
                                       --------     -------         --------
     Operating income                       445          56              501
     Less interest expense                  131                          131
     Other income, net                      134                          134
                                       --------     -------         --------
     Income before income taxes             448          56              504
     Income tax expense                     129          20 (3)          149
                                       --------     -------         --------
     Net income                        $    319     $    36         $    355
                                       ========     =======         ========



<PAGE>


            Unaudited Pro Forma Condensed Consolidated Balance Sheet
                             As of December 31, 1998

                 ASSETS
                                       Historical    Adjustments    Pro Forma
                                       ----------    -----------    ---------
                                                  (in millions)
     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                    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                    2,260                        2,260
      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 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 adjustment    (68)       --                (68)
                                       --------     -------         --------
         Total equity                         9       3,162            3,171
                                       --------     -------         --------
     Total liabilities and equity      $ 15,506     $ 3,162         $ 18,668
                                      =========     =======         ========


<PAGE>


         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  resulting pro forma
              increases (decreases) in pension and other postretirement  benefit
              costs  for the  three  and six  months  ended  June  30,  1998 are
              summarized as follows:

                                                  Three Months    Six Months
                                                  ------------    ----------
                                                         (in millions)
               Pension related costs                 $   53         $  106
               Postretirement benefits other
                than pension                           (119)          (238)
                  Total                              $  (66)        $ (132)
                                                     ======         ======

               Portion attributable to cost
                 of sales                            $  (62)        $ (124)
                                                     ======         ======
               Portion attributable to selling,
                 general and administrative          $   (4)        $   (8)
                                                     ======         ======

          (2) Reflects   the   estimated   incremental   selling,   general  and
              administrative   costs  associated  with  operating  Delphi  as  a
              stand-alone  publicly  traded  company.  The  resulting  pro forma
              adjustments  for the three and six months  ended June 30, 1998 are
              as follows:
                                                  Three Months    Six Months
                                                  ------------    ----------
                                                         (in millions)
               Incremental insurance and risk
                 management                          $    9         $   18
               Incremental corporate costs*              12             24
               Taxes other than income                   13             26
               Other*                                     4              8
                                                     ------         ------

                  Total                              $   38         $   76
                                                     ======         ======

              *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." For purposes of this
              pro forma presentation, 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 were impacted by the change in
              General Motors accounts  receivable payment terms describe 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.

         (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.

         (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.



<PAGE>


   Earnings Per Share.  The  historical  basic  earnings per share  amounts were
computed using weighted average shares  outstanding for each respective  period.
Diluted  earnings per share also  reflects the  weighted  average  impact of all
potentially   dilutive  securities  during  the  periods  presented  unless  the
inclusion would have an antidilutive effect.  Diluted shares outstanding include
the impact of:

o     Dilutive securities issued concurrent with the IPO in February 1999.
o     Stock options issued in connection with the concurrent cancellation of GM
         stock options held by Delphi employees at the date of the Spin-Off.

   For historical  computations,  dilutive securities are only weighted from the
date of issuance forward. Weighted average shares used in calculating historical
basic and diluted earnings per share were:

                                          Three Months Ended    Six Months Ended
                                               June 30,             June 30,
                                           1999        1998      1999       1998
                                           ----        ----     ----        ----
                                                      (in thousands)

      Weighted average shares
        outstanding                     565,000     465,000   542,901    465,000
      Effect of dilutive securities       2,013        --         971       --
                                        -------     -------   -------    -------
      Diluted shares outstanding        567,013     465,000   543,872    465,000
                                        =======     =======   =======    =======

   Historical  earnings  per share for 1998 and the first six  months of 1999 do
not  reflect the full  impact of the IPO in  February  1999 or the  transactions
resulting from the Spin-Off  effective May 28, 1999. For  comparative  purposes,
management has calculated basic and diluted weighted average shares  outstanding
as if shares issued in the IPO were  outstanding  since January 1, 1998. On this
basis,  shares  outstanding and the resulting diluted earnings per share,  after
considering the pro forma impact of the terms of the Separation, were:

                                          Three Months Ended    Six Months Ended
                                               June 30,             June 30,
                                           1999        1998       1999      1998
                                           ----        ----       ----      ----
                                         (in thousands, except per shar amounts)

      Weighted average shares
        outstanding                     565,000     565,000   565,000    565,000
      Effect of dilutive securities       2,013        --         971       --
                                        -------     -------   -------    -------
      Diluted shares outstanding        567,013     565,000   565,971    565,000
                                        =======     =======   =======    =======


      Pro forma diluted earnings
        per share                     $    0.69   $    0.18  $   1.20  $    0.63
                                      =========   =========  ========  =========


3. INVENTORIES, NET

   Inventories, net consisted of:
                                                June 30,    December 31,
                                                  1999          1998
                                                  ----          ----
                                                     (in millions)

         Productive material, work-in process
           and supplies                        $ 1,682       $ 1,910
         Finished goods                            165           253
                                               -------       -------
           Total inventories at FIFO             1,847         2,163
         Less allowances to adjust the
           carrying value of certain
           inventories to LIFO                    (393)         (393)
                                               -------       -------
           Total inventories, net              $ 1,454       $ 1,770
                                               =======       =======



<PAGE>


4. DEBT

   On May 4,  1999,  we  completed  a public  offering  of  unsecured  term debt
securities  totaling $1.5 billion with  maturities of five years,  ten years and
thirty  years.  The offering  consisted of $500  million of  securities  bearing
interest  at 6.125% and  maturing  on May 1, 2004,  $500  million of  securities
bearing  interest  at 6.50% and  maturing  on May 1, 2009,  and $500  million of
securities  bearing  interest at 7.125% and maturing on May 1, 2029. We used the
proceeds of the debt offering to refinance amounts previously  outstanding under
the long-term portion of our revolving credit facilities. Subsequent to the term
debt offering,  the $4.9 billion previously available under our revolving credit
facilities  was reduced to $3.0  billion in  available  funds,  generally  split
between  364-day  and  five  year  tranches.  In May  1999,  we  entered  into a
commercial paper program  providing up to $1.0 billion of available  borrowings.
As of June 30, 1999, no amounts were outstanding under this program.

5. PENSION AND OTHER POSTRETIREMENT BENEFITS

   Until May 28, 1999,  Delphi's U.S. hourly employees  continued to participate
in the defined benefit pension plan and postretirement plans administered by GM.
Effective May 28, 1999, pension and other  postretirement  obligations under the
GM plans relating to Delphi's U.S. active and inactive employees were assumed by
Delphi plans subject to the provisions  described  below.  The Delphi plans were
established and are being  administered  under the same terms that existed under
the GM plans.  GM's  pension  plan  assets  will be divided  between the pension
trusts for qualified  plans of Delphi and GM so that each plan's trust  receives
the legally  required  amount to meet the  requirements  set forth in applicable
benefit and tax  regulations.  Under the terms of the Separation  Agreement,  GM
will assume  responsibility for the pension and postretirement  benefit payments
to Delphi's U.S.  hourly  employees who retire on or before  October 1, 1999. In
May 1999,  Delphi,  GM, and the United Auto Workers Union (UAW) agreed to extend
GM's  responsibility to cover Delphi's UAW employees who retire on or before the
later of October 1, 1999 or the expiration of the current UAW National Agreement
between GM and the UAW,  including any  extensions  of the agreement  beyond the
current September 14, 1999 expiration date.

   On June 14, 1999, we made a $600 million  voluntary cash  contribution to the
Delphi  pension  trust to further fund the plan  obligations.  During the second
quarter  of  1998  we  contributed  $615  million  to  a  Voluntary   Employees'
Beneficiary  Association  (VEBA) trust.  The contribution was made in connection
with GM's pre-funding of a portion of its other postretirement  employee benefit
liability. In accordance with the terms of the Separation Agreement, GM retained
100% of the pre-funding  and,  accordingly,  our other  postretirement  employee
benefit liability does not reflect an allocation of the VEBA trust assets.

6. STOCKHOLDERS' EQUITY

      Changes in  stockholders'  equity for the six months  ended June 30,  1999
were:



<PAGE>



<TABLE>
<CAPTION>

                                                              Additional                Accumulated       General          Total
                                           Common Stock        Paid in      Retained    Translation     Motors' net    Stockholders'
                                         Shares    Amount      Capital      Earnings    Adjustments      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                                                              $  678                                           678
     Dividends declared                                                         (40)                                          (40)
     Foreign currency translation
       adjustments                                                                           (119)                           (119)
                                           ---     -----       -------       ------       -------       --------         --------
     Balance at June 30, 1999              565     $   6       $ 3,233       $  638       $  (187)      $  --            $  3,690
                                           ===     =====       =======       ======       =======       ========         ========


<PAGE>


</TABLE>



7. SEGMENT REPORTING

   Selected information regarding our product sectors is as follows:


<TABLE>
<CAPTION>

                                                             Safety
                                        Electronics &      Thermal &
                                           Mobile          Electrical      Dynamics &
                                        Communication     Architecture     Propulsion     Other (a)     Total
                                        -------------     ------------     ----------     ---------     -----
                                                                    (in millions)
   For the Three Months Ended:
   June 30, 1999
<S>                                       <C>               <C>             <C>           <C>        <C>
     Net sales to GM                      $  1,118          $  1,939        $  2,929      $   --     $  5,986
     Net sales to other customers              192               768             737          --        1,697
     Inter-sector net sales                     86                60               4        (150)         --
                                          --------           -------        --------      ------     --------
      Total net sales                     $  1,396          $  2,767        $  3,670      $ (150)    $  7,683
                                          ========          ========        ========      ======     ========
     Operating income                     $    180          $    249        $    221      $  (21)    $    629
                                          ========          ========        ========      ======     ========

   June 30, 1998
     Net sales to GM                      $    915          $  2,047        $  2,487      $  --      $  5,449
     Net sales to other customers              157               820             615         --         1,592
     Inter-sector net sales                     62                40               2        (104)        --
                                          --------          --------        --------      ------     --------
      Total net sales                     $  1,134          $  2,907        $  3,104      $ (104)    $  7,041
                                          ========          ========        ========      ======     ========
     Operating income (b)                 $     54          $     90        $     38      $  (71)    $    111
                                          ========          ========        ========      ======     ========

                                                             Safety
                                        Electronics &      Thermal &
                                           Mobile          Electrical      Dynamics &
                                        Communication     Architecture     Propulsion     Other (a)     Total
                                        -------------     ------------     ----------     ---------     -----
                                                                    (in millions)
   For the Six Months Ended:
   June 30, 1999
     Net sales to GM                      $  2,208          $  3,876        $  5,755      $  --      $ 11,839
     Net sales to other customers              379             1,491           1,443         --         3,313
     Inter-sector net sales                    162               113               6        (281)        --
                                          --------          --------        --------      ------     --------
      Total net sales                     $  2,749          $  5,480        $  7,204      $ (281)    $ 15,152
                                          ========          ========        ========      ======     ========
     Operating income                     $    338          $    464        $    346      $  (62)    $  1,086
                                          ========          ========        ========      ======     ========

   June 30, 1998
     Net sales to GM                      $  1,983          $  4,350        $  5,221      $  --      $ 11,554
     Net sales to other customers              308             1,557           1,245         --         3,110
     Inter-sector net sales                    126                90               4        (220)        --
                                          --------          --------        --------      ------     --------
      Total net sales                     $  2,417          $  5,997        $  6,470      $ (220)    $ 14,664
                                          ========          ========        ========      ======     ========
     Operating income (b)                 $    193          $    300        $    111      $ (159)    $    445
                                          ========          ========        ========      ======     ========

</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 cost
                     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 (in
                     millions):

<PAGE>
<TABLE>
<CAPTION>
                                                             Safety
                                        Electronics &      Thermal &
                                           Mobile          Electrical      Dynamics &
                                        Communication     Architecture     Propulsion     Other (a)     Total
                                        -------------     ------------     ----------     ---------     -----


<S>                                       <C>               <C>             <C>           <C>        <C>
                  Three months ended
                    June 30, 1998         $     44          $     91        $     62      $  (58)    $    139
                                          ========          ========        ========      ======     ========
                  Six months ended
                    June 30, 1998         $    173          $     30        $    159      $ (133)    $    501
                                          ========          ========        ========      ======     ========

</TABLE>

<PAGE>



8. COMPREHENSIVE INCOME

   Our comprehensive income was:

                                        Three Months Ended     Six Months Ended
                                             June 30,              June 30,
                                        1999          1998     1999        1998
                                        ----          ----     ----        ----
                                                    (in millions)

Net income                             $ 394         $  83    $ 678       $ 319
Other comprehensive (loss)
  income-foreign currency translation
  adjustments, net of tax                (15)           (8)    (119)          6
                                        ----          ----     ----        -----
Comprehensive income                   $ 379          $ 75    $ 559       $ 325
                                       =====          ====    =====        =====


9. COMMITMENTS AND CONTINGENCIES

   Delphi is from time to time  subject  to  various  legal  actions  and claims
incidental to our  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 our  business  or
consolidated financial position.




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

Overview

   It was another  exciting  quarter for Delphi as we  continued to build on our
first quarter 1999 success.  Our spin-off from General  Motors was completed and
we realized our goal of  independence  on May 28, 1999.  In addition,  we posted
strong  operating  results during the second quarter of 1999 and we continued to
generate  strong cash flow.  Our strong cash flows have allowed us to pursue our
pension funding  objectives while  continuing to realize our growth  initiatives
and  meet  our  dividend  commitments.  In June  1999,  we  made a $600  million
voluntary  cash  contribution  to the Delphi hourly  pension plan and declared a
dividend  of  $0.07  per  share  payable  in July.  Our  customers  continue  to
demonstrate their acceptance of products from an independent Delphi as evidenced
by our recently awarded contracts with Nissan,  Ford, and Mack Trucks, to name a
few.

   In  summary,  we believe we are on track to achieve our  business  objectives
while continuing to focus on the needs and expectations of our customers.

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
June 30, 1999 financial statements.

   Three Months Ended June 30, 1999 versus Three Months Ended June 30, 1998

   Net Sales. Consolidated net sales and changes in net sales by product sector
for the three months ended June 30, 1999 and 1998 were:
<TABLE>
<CAPTION>

                                                  Three Months Ended
                                                       June 30,             Change
                                                       --------             ------
                                                  1999          1998       $      %
                                                  ----          ----      ---    ---
                                                        (dollars in millions)

<S>                                             <C>         <C>        <C>      <C>
     Electronics & Mobile Communication         $ 1,396     $ 1,134    $ 262    23.1%
     Safety, Thermal & Electrical Architecture    2,767       2,907     (140)   (4.8)
     Dynamics & Propulsion                        3,670       3,104      566    18.2
     Eliminations                                  (150)       (104)     (46)    n/a
                                                -------     -------    -----   -----
       Consolidated net sales                   $ 7,683     $ 7,041    $ 642     9.1%
                                                =======     =======    =====   =====
</TABLE>

   Net sales for the second  quarter of 1999  increased  $642  million  over the
comparable  period of 1998 and increased  $214 million over the first quarter of
1999. Our increased net sales reflect  continued  growth in revenue from ongoing
operations,  strong North American sales volume and the impact of work stoppages
at certain GM and Delphi locations during the second quarter of 1998.  Increases
in net sales compared to 1998 were partially  offset by the impact of businesses
divested in late 1998, which had average annual sales of about $2.0 billion, and
continued  price  pressures.  After  adjusting  to  eliminate  the 1998 sales of
divested  businesses,  our consolidated net sales for the second quarter of 1999
increased  about 16.8% over the comparable  period of 1998. Our non-GM sales for
the second quarter of 1999 increased  about 11.4% over the comparable  period of
1998,  after adjusting to eliminate the 1998 sales of divested  businesses.  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.  Price  reductions  totaling  about $126 million for the second
quarter, or 1.6% of net sales, impacted all of our product sectors.


<PAGE>


   Operating Income. Operating income was $629 million for the second quarter of
1999 compared to operating income of $111 million for the second quarter of 1998
and $457 million for the first quarter of 1999.  Our reported  operating  income
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 for
the three months ended June 30, 1999 and 1998 was:

<TABLE>
<CAPTION>

                                                  Three Months Ended
                                                       June 30,            Change
                                                       --------            ------
                                                           Pro Forma
                                                  1999        1998        $      %
                                                  ----        ----       ---    ---
                                                        (dollars in millions)

<S>                                             <C>        <C>        <C>      <C>
     Electronics & Mobile Communication         $  180     $   44     $  136   309.1%
     Safety, Thermal & Electrical Architecture     249         91        158   173.6
     Dynamics & Propulsion                         221         62        159   256.5
     Other                                         (21)       (58)        37     n/a
                                                ------     ------     ------   -----
     Total operating income                     $  629     $  139     $  490   352.5%
                                                ======     ======     ======   =====
</TABLE>


   The strong  improvement  in second  quarter 1999  operating  income  reflects
increased  volumes due to a strong North American  market and the impact of work
stoppages at certain GM and Delphi  locations during the second quarter of 1998.
The  improvement  also  reflects the results of our  continuing  cost  reduction
efforts  and lean  manufacturing  initiatives  that  are  being  implemented  in
response to industry pricing pressures. Our gross margin was 16.0% for the three
months ended June 30, 1999 compared to a pro forma gross margin of 11.7% for the
comparable period of 1998.  Selling, general and administrative  expenses during
the second quarter of 1999 decreased slightly compared to pro forma 1998 amounts
while  depreciation  and  amortization  expense  decreased by $76  million.  The
decrease in depreciation and amortization  reflects reductions in expense due to
the asset impairment charges recognized in 1998, businesses divested during 1998
and the timing of various  capital  projects  beginning in the second quarter of
1998.

   Net Income.  Net income  totaled $394 million for the second  quarter of 1999
compared to historical  net income of $83 million for the second quarter of 1998
and $284 million for the first quarter of 1999. For comparative purposes,  after
giving effect to the terms of the Separation Agreement, our pro forma net income
for the three months ended June 30, 1998 would have been $101 million.  Interest
expense  decreased  by $31 million due to lower 1999  average  outstanding  debt
balances and favorable  interest rates compared to 1998. Our lower debt balances
reflect the impact of strong cash flows during 1999.  Our  effective  income tax
rate  increased  to 38% for the second  quarter of 1999  compared to a pro forma
effective  rate of 20%  during  the  comparable  period of 1998.  The  increased
effective  income tax rate primarily  reflects the impact of our separation from
GM and the 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 our separation
from GM. Currently,  we have 565 million shares  outstanding,  consisting of the
100 million  shares issued in our initial public  offering in  February 1999 and
465 million shares  previously  owned by GM. In connection with of the Spin-Off,
stock  options  held by Delphi  employees  on shares  of GM  common  stock  were
converted to equivalent stock options on Delphi common stock as of May 28, 1999.
Under generally accepted accounting principles, the shares issued in our IPO and
dilution  associated  with the  converted  options  are  excluded  from the 1998
calculation of earnings per share and only included in the 1999  calculation for
the period of time outstanding.  This results in historical diluted earnings per
share of $0.69  and $0.18 for the three  months  ended  June 30,  1999 and 1998,
respectively.

   Because of the change in  outstanding  shares 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  comparable  basis,  after giving
effect to the terms of the Separation Agreement,  our pro forma diluted earnings
per share would remain at $0.18 for the three  months  ended June 30, 1998.  See
Note 2 to our consolidated financial statements for additional information.

   Six Months Ended June 30, 1999 versus Six Months Ended June 30, 1998

   Net Sales. Consolidated net sales and changes in net sales by product sector
for the six months ended June 30, 1999 and 1998 were:
<TABLE>
<CAPTION>
                                                  Six Months Ended
                                                      June 30,            Change
           Product Sector                           1999     1998         $      %
           --------------                           ----     ----        ---    ---
                                                        (dollars in millions)

<S>                                             <C>         <C>        <C>      <C>
     Electronics & Mobile Communication         $   2,749   $  2,417   $  332   13.7%
     Safety, Thermal & Electrical Architecture      5,480      5,997     (517)  (8.6)
     Dynamics & Propulsion                          7,204      6,470      734   11.3
     Eliminations                                    (281)      (220)     (61)   n/a
                                                 --------   --------   ------    ---
       Consolidated net sales                    $ 15,152   $ 14,664   $  488    3.3%
                                                 ========   ========   ======   ====
</TABLE>

    The increase in net sales for the  first six months of 1999 compared to 1998
reflects strong North American sales volumes  partially due to work stoppages at
certain  GM and Delphi  locations  during  the  second  quarter of 1998.  Volume
improvements  over  1998 were  partially  offset  by the  impact  of  businesses
divested during 1998.  After adjusting to eliminate 1998 sales from our divested
businesses,  our 1999  year to date net sales  increased  10.5% and year to date
sales to non-GM  customers  increased 11.6% over the comparable  period of 1998.
Volume  improvements  over 1998 were also  partially  offset by continued  price
reductions,  which totaled $229 million, or 1.5% of net sales, for the first six
months of 1999.

    Operating  Income.  Operating  income  was $1.1  billion  for  the first six
months of 1999  compared to  operating  income of $445 million for the first six
months of 1998.  After giving  effect to the terms of the  Separation  Agreement
(see Note 2 to our  financial  statements),  our  operating  income  by  product
sector for the six months ended June 30, 1999 and 1998 was:
<TABLE>
<CAPTION>

                                                  Six Months Ended
                                                      June 30,            Change
                                                          Pro Forma
           Product Sector                           1999     1998         $     %
           --------------                           ----     ----        ---   ---
                                                        (dollars in millions)

<S>                                              <C>        <C>      <C>      <C>
     Electronics & Mobile Communication          $    338   $  173   $  165   95.4%
     Safety, Thermal & Electrical Architecture        464      302      162    53.6
     Dynamics & Propulsion                            346      159      187   117.6
     Other                                            (62)    (133)      71     n/a
                                                 --------   ------   ------   -----
     Total operating income                      $  1,086   $  501   $  585   116.8%
                                                 ========   ======   ======   =====
</TABLE>

   Operating income for the first six months of 1999 increased $585 million over
the comparable period of 1998 reflecting strong volume growth,  partially due to
work  stoppages that impacted the second quarter of 1998, and the results of our
continuing cost reduction  efforts and lean  manufacturing  initiatives that are
being  implemented in response to industry pricing  pressures.  Our gross margin
was 15.2% for the first six months of 1999  compared to a pro forma gross margin
of 11.7% for the  comparable  period of 1998.  Gross  margin  improvements  were
partially offset by increased selling,  general and administrative  expenses due
to incremental costs required as a result of our efforts to pursue business with
non-GM customers and expand our global operations. Depreciation and amortization
expense for 1999 improved over 1998 reflecting  reductions in expense due to the
asset impairment charge recognized in 1998 and businesses divested during 1998.


<PAGE>


    Net  Income.  Net income for the first six months of 1999 was  $678  million
compared to  historical  net income of $319  million for the first six months of
1998.  For  comparative  purposes,  after  giving  effect  to the  terms  of the
Separation Agreement,  our pro forma net income for the first six months of 1998
was $355 million.  Interest expense decreased by $71 million as strong 1999 cash
flows  reduced our average  outstanding  debt  balances and interest  rates were
favorable  compared to 1998. Our effective  income tax rate increased to 38% for
the  first six  months of 1999  compared  to a pro forma  effective  rate of 30%
during the comparable  period of 1998. The increased  effective  income tax rate
primarily  reflects the impact of our separation  from GM and the resulting loss
of certain tax credits which were previously available to us.

   Earnings per share.  Historical diluted earnings per share for the six months
ended June 30, 1999 were $1.25 compared to historical diluted earnings per share
of $0.69 for the six  months  ended June 30,  1998.  For  comparative  purposes,
assuming the 100 million shares issued in our IPO were outstanding since January
1, 1998 and after giving effect to the terms of the  Separation  Agreement,  our
earnings per share would have been $1.20 for the first half of 1999  compared to
$0.63 for the first half of 1998.

Liquidity and Capital Resources

   Liquidity

   Our net  liquidity,  measured as cash and  marketable  securities  less total
debt, was $(0.6) billion at June 30, 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 33% at June 30, 1999 and 100% at December
31,  1998.  If our  Separation  from GM and the IPO had occurred on December 31,
1998, our 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 half
of 1999. See "--Liquidity and Capital Resources--Cash Flows". As a result of our
strong cash flows,  our Board of Directors  approved a treasury stock program to
purchase  up to 19 million  shares of Delphi  common  stock from time to time to
pre-fund the  requirements  of incentive,  stock option and stock purchase plans
over the next 12 months.  Further,  we expect that our  improved  net  liquidity
position  will  allow 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 half of
1999, we financed the short-term  cash-flow gap, as needed, with available third
party borrowings. See "--Liquidity and Capital Resources--Cash  Flows--Operating
Activities".

   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.

   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. On
May 4, 1999, we completed a public  offering of unsecured  term debt  securities
totaling $1.5 billion in equal five year, ten year and thirty year tranches. The
proceeds  were  used to  refinance  amounts  previously  outstanding  under  the
long-term  portion  of  our  revolving  credit  facilities.  Subsequent  to  the
unsecured  debt  issuance,  the $4.9  billion  previously  available  under  our
revolving  credit  facilities  was reduced to $3.0 billion in  available  funds,
generally  split  between  364-day  and five  year  tranches.  See Note 4 to our
consolidated  financial statements for additional  information.  In May 1999, we
entered  into a  commercial  paper  program  providing  up to  $1.0  billion  of
available  borrowings.  As of June 30, 1999, we had no amounts outstanding under
our revolving credit facilities or commercial paper program.

   Cash Flows

   Operating  Activities.  Net  cash  used  in  operating  activities  was  $2.4
billion  and $338  million  for the six  months  ended  June 30,  1999 and 1998,
respectively.  The use of cash during 1999  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 $1.3 billion. Cash generated during the
first half of 1999 reflects our strong earnings,  reductions in inventory levels
resulting from our lean manufacturing initiatives and the timing of payments for
accounts payable and certain accrued  expenses.  These favorable cash flows were
partially offset by a $600 million voluntary  pension  contribution made in June
1999. In response to the change in accounts receivable payment terms as a result
of the Separation  Agreement,  we have successfully  extended payment terms with
many of our suppliers.  We expect to continue to negotiate  these extended terms
with our suppliers over time.

   Investing  Activities.  Cash flows used in investing  activities totaled $422
million  and $647  million  for the six  months  ended  June 30,  1999 and 1998,
respectively. Cash used in investing activities primarily relates to our capital
expenditure program. The decrease in cash used in investing activities primarily
reflects differences in the timing of project spending for new product programs.

   Financing  Activities.  Net cash  provided by financing  activities  was $3.1
billion  and $1.0  billion  for the six  months  ended  June 30,  1999 and 1998,
respectively.  Cash provided by financing activities for the first six months of
1999 include the proceeds from our initial public  offering in February 1999 and
the proceeds from our public  offering of unsecured term debt  securities in May
1999.  The  proceeds  from our  initial  public  offering  were used for general
corporate purposes,  including working capital requirements which were initially
impacted  by the change in General  Motors  accounts  receivable  payment  terms
described  above.  The proceeds  from our debt  offering  were used to refinance
amounts previously borrowed under our revolving credit facilities.

   Dividends. On June 9, 1999, the Delphi Board declared a quarterly dividend on
Delphi  common  stock,  payable on July 20, 1999 to holders of record as of June
21, 1999.

Our Other Postretirement Employee Benefits and Pension Obligations

   Until May 28, 1999,  Delphi's U.S. hourly employees  continued to participate
in the defined benefit pension plan and postretirement plans administered by GM.
Effective May 28, 1999, pension and other  postretirement  obligations under the
GM plans relating to Delphi's U.S. active and inactive employees were assumed by
Delphi plans subject to the provisions  described  below.  The Delphi plans were
established and are being  administered  under the same terms that existed under
the GM plans.  GM's  pension  plan  assets  will be divided  between the pension
trusts for qualified  plans of Delphi and GM so that each plan's trust  receives
the legally  required  amount to meet the  requirements  set forth in applicable
benefit and tax  regulations.  Under the terms of the Separation  Agreement,  GM
will assume  responsibility for the pension and postretirement  benefit payments
to Delphi's U.S.  hourly  employees who retire on or before  October 1, 1999. In
May 1999,  Delphi,  GM, and the United Auto Workers Union (UAW) agreed to extend
GM's  responsibility to cover Delphi's UAW employees who retire on or before the
later of October 1, 1999 or the expiration of the current UAW National Agreement
between GM and the UAW,  including any  extensions  of the agreement  beyond the
current September 14, 1999 expiration date.

   As part of our capital planning process, we may make voluntary  contributions
to our hourly pension plan in excess of federal regulatory minimum  requirements
to improve the funded status of our pension plans.  In this regard,  on June 14,
1999,  we  made  a  $600  million  voluntary  cash  contribution  to  the  newly
established Delphi hourly pension plan. Our intent continues to be to fully fund
our  current  hourly  pension  benefits  over the next few years on an  economic
basis.


<PAGE>


Year 2000

   During the second  quarter 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  second  quarter,  we  continued  to address  the
remediation of other systems on a prioritized basis, including implementation of
new enterprise  software to address Year 2000 issues.  The  enterprise  software
implementation was successfully  completed during the second quarter of 1999. 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 $12 million of Year 2000 expenses  during the second  quarter of
1999.  Delphi  currently  expects its total Year 2000  spending to be about $104
million, which will be funded from operations.

   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 us or on our behalf.  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  may 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.



<PAGE>


                           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 5.  OTHER INFORMATION

   Shareholders'  proposals  intended to be presented at the 2000 Annual Meeting
of  Stockholders  must be received  between the close of business on November 2,
1999 and the close of  business  on  December  2,  1999,  for  inclusion  in the
Company's proxy statement and form of proxy for that meeting.  Any such proposal
should be mailed to the attention of the Corporate Secretary.

   Attached,  as Exhibit 99 to the Form 10-Q,  is the  Company's  press  release
dated July 19, 1999 regarding second quarter 1999 earnings which is incorporated
herein.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

Exhibit
Number            Exhibit Name                                          Page No.

4.1         Instruments defining the rights of holders of debt of the
            registrant have been omitted from this exhibit index
            because the amount of debt authorized  under any such
            instrument  does not  exceed  10% of the total assets of
            the registrant and its subsidiaries.  The registrant agrees
            to furnish a copy of any such instrument to the Commission
            upon request.

27          Financial data schedule (for SEC information only)             n/a

99          Press release dated July 19, 1999 regarding quarterly earnings n/a

(b) REPORTS ON FORM 8-K

The  following  reports on Form 8-K were filed during the quarter ended June 30,
1999 reporting matters under Item 5, Other Events:

April 12, 1999
   Reporting that the Company had issued a press release stating that GM's board
   of directors approved complete separation of Delphi from GM.
April 15, 1999
   Reporting  that the Company had issued a press  release with earnings for the
three months ended March 31, 1999.
April 28, 1999
   Filing certain documents related to the Company's term debt offering.
May 28, 1999
   Reporting that the Company had issued a press release stating that Delphi was
   fully  divested  from GM, and that, as a result,  GM executives  had resigned
   from Delphi's Board of Directors.


<PAGE>



                                    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)


July 19, 1999                                         /s/ Paul R. Free
-------------                                   ------------------------------
                                                Paul R. Free, Chief Accounting
                                                Officer and Controller