SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549

                                FORM 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934 
                 For the fiscal year ended December 28, 1997

                                   OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934 
                   For the transition period from        to

                        Commission  File No. 1-7807

                            CHAMPION PARTS, INC.       
                           _____________________
            (Exact name of Registrant as specified in its charter)
          Illinois                               36-2088911
___________________________________     _____________________________________
(State or other jurisdiction             (IRS Employer Identification Number)
 of incorporation or organization)                       
                              
751 Roosevelt Rd., Bldg. 7, Suite 110, Glen Ellyn, IL          60137   
_____________________________________________________       ___________
 (Address of Principal Executive Offices)                   (Zip Code)
   
Registrant's telephone number, including area code: 630 942-8317
__________________________________________________  ____________   

Securities Registered Pursuant to Section 12(b) of the Act:        None
__________________________________________________________   

Securities Registered Pursuant to 
 Section 12(g) of the Act:                      Common Shares, $.10 Par Value
__________________________________                     (Title of Class)
   
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      
   
Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of Registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this 
Form 10-K or any amendment to this Form 10-K.   [  ]
   
As of March 7, 1998, 3,655,266 Common Shares were outstanding and the 
aggregate market value of the Common Shares held by non-affiliates of the 
Registrant (based on the closing price as reported on the National
Quotation Bureau Incorporated) was approximately  $1,169,685.  For 
information as to persons considered to be affiliates for purposes of this 
calculation, see "Item 5. Market for the Company's Common Shares and Related
Shareholder Matters".
   
   
   
                              
   
PART I
   
Item 1.             Business
   
Unless  the  context  indicates  otherwise,  the  term  "Company"  as  used 
herein  means Champion Parts, Inc. and its subsidiaries.
   
Products
   
The Company remanufactures and sells replacement fuel system components 
(carburetors and diesel fuel injection components) and constant velocity 
drive assemblies for substantially all makes and models of domestic and 
foreign automobiles and trucks.  It also remanufactures and sells replacement
electrical and mechanical products for certain passenger car, agricultural 
and heavy duty truck original equipment applications.
   
In 1995, the Company exited the manufacture and sale of passenger car 
electrical (alternators and starters) and mechanical (clutches and water 
pumps) products sold to traditional warehouse distributors and retailers. 
Sales of these product lines accounted for approximately 56% of the Company's
1995 net sales.
   
During the fiscal years ended December 28, 1997, December 29, 1996, and 
December 31, 1995, the Company's sales of parts for automobiles (including 
light duty trucks) accounted for approximately 78%, 74% and 89%, 
respectively, of the Company's net sales, and sales of parts for heavy duty 
trucks and farm equipment accounted for approximately 22%, 26% and 11%, 
respectively, of such net sales.
   
Marketing and Distribution
   
The Company's products are marketed throughout the continental United States 
and in a limited manner in Canada.  The Company sells carburetors and 
constant velocity drive assemblies to automotive warehouse distributors, 
which in turn sell to jobber stores and through them to service stations, 
automobile repair shops and individual motorists.  In addition, the Company 
sells to aftermarket retail chains that distribute products through their 
stores.  The Company sells electrical and mechanical products to 
manufacturers of automobiles, trucks and farm equipment, which purchase the 
Company's products for resale through their dealers.  Of the Company's net 
sales in the year ended December 28, 1997, approximately 10% were to 
automotive warehouse distributors; approximately 33% were to manufacturers of 
automobiles, trucks and farm equipment and heavy duty fleet specialists;
and approximately 57% were to retailers and other customers. 
   
The Company exhibits its products at trade shows.  The Company also prepares 
and publishes catalogs of its products, including a guide with information as
to the various vehicle models for which the Company's products may be used 
and a pictorial product identification guide to assist customers in the 
return of used units.  The Company's salespersons and sales agents call on 
selected customers of warehouse distributors which carry the Company's 
products to familiarize these customers with the Company's products and the 
applications of its products to varied automotive equipment.
   
During the fiscal year ended December 28, 1997, the four largest customers of
the Company accounted for approximately 38% (AutoZone, Inc.),19% (Advance 
Auto Parts), 18% (John Deere), and 12% (Chrysler Corp.) respectively, of net 
sales, and no other customer accounted for more than 10% of net sales.
     
The Company makes available to its customers the MEMA Transnet computerized 
order entry system which is administered by the Motor Equipment Manufacturers
Association. The MEMA Transnet system enables a customer in any area of the 
United States to place orders into the Company's central computer, which 
transmits the orders to the Company's plant servicing that customer's 
geographic area.  It also has direct Electronic Data Interchange with its 
largest customers.
   
As of December 28, 1997, sales were made by two direct salesmen and 11 sales 
agencies. 
   
The Company's sales are typically higher in the first and second quarters 
than in the third and fourth quarters as there are more repairs of fuel 
systems, agricultural and heavy duty products in those periods.   
   
Materials
   
In its remanufacturing operations, the Company obtains used units, commonly 
known as "cores".  A majority of the units remanufactured by the Company are 
purchased from customers as trade-ins, which are encouraged by the Company 
in the sale of remanufactured units. 
   
The price of a finished product is comprised of a separately invoiced amount 
for the core included in the product ("core value") and an amount for 
remanufacturing.  Upon receipt of a core as a trade-in, credit is given to 
the customer for the then current core value of the part returned.  The 
Company limits trade-ins to cores for units included in its sales catalogs
and in rebuildable condition, and credit for cores is allowed only against 
purchases by a customer of similar remanufactured products within a specified
time period.  A customer's total allowable credit for core trade-ins is 
further limited by the dollar volume of the customer's purchases of similar 
products within such time period.  In addition to allowing core returns, the 
Company permits warranty and stock adjustment returns (generally referred to 
as "product returns") pursuant to established policies.  The Company's core
return policies are consistent with industry practice, whereby 
remanufacturers accept product returns from current customers regardless of 
whether the remanufacturer actually sold the product.  The Company has no 
obligation to accept product returns from customers that no longer purchase 
from the Company. 
   
Other materials and component parts used in remanufacturing, and some cores, 
are purchased in the open market.  When cores are not available in sufficient
supply for late models of automobiles, trucks and farm equipment or for 
foreign model automobiles, new units sometimes are purchased and sold as 
remanufactured units.  To market a full line of products, the Company also 
purchases certain remanufactured and new automotive parts which it does not 
produce.
   
Patents, Trademarks, Etc. 
   
The Company has no material patents, trademarks, licenses, franchises or 
concessions.
   
Backlog
   
The Company did not have a significant order backlog at any time during the 
fiscal years 1997 or 1996.
     
Competition
   
The remanufactured automotive parts industry is highly competitive as the 
Company competes with a number of other companies (including certain original
equipment manufacturers) which sell remanufactured automotive parts.  The 
Company competes with several large regional remanufacturers and with 
remanufacturers which are franchised by certain original equipment 
manufacturers to remanufacture their products for regional distribution.  
The Company also competes with numerous remanufacturers which serve
comparatively local areas.  In addition, sales of remanufactured parts 
compete with sales of similar new replacement parts. Manufacturers of kits 
used by mechanics to rebuild carburetors may also be deemed to be competitors
of the Company. 
   
The Company competes in a number of ways, including price, quality, product 
performance, prompt order fill, service and warranties.  The Company believes
its technical expertise in the niche product lines it sells has been an 
important factor in enabling the Company to compete effectively.
   
   
Engineering
   
Each of the Company's main product lines are supported by product 
engineer(s). Engineers participate in product planning, product line 
structuring, cataloging and engineering of the Company's products and in 
developing manufacturing processes.  The primary activities of the engineers 
are improving the quality of existing products, formulating specifications 
and procedures for adapting particular remanufactured products for use on 
makes and models of vehicles in addition to those for which originally 
designed, converting cores from earlier makes and models for use on later 
makes and models and developing specifications, supplies and procedures for 
remanufacturing additional products.
   
The Company retains a Director of Quality Assurance who conducts periodic 
quality audits of the Company's plants under its quality improvement program 
to test product quality and compliance with specifications. 
   
The engineers also design and build new tools, machines and testing equipment
for use in all the Company's plants, and develop specifications for certain 
components manufactured by the Company for use in its remanufacturing 
operations.  The engineers design and test new methods of reassembling
components and cleaning parts and cores. The Company believes such activities  
improve the Company's ability to serve the needs of its customers. 
   
Environmental Matters 
   
The Company is subject to various federal, state and local environmental laws
and regulations incidental to its business.  The Company continues to modify,
on an ongoing basis, processes that may have an environmental impact. 
Although management believes that the current level of Environmental Reserves
are adequate to satisfy the future compliance with the environmental laws, 
the ultimate outcome of its environmental matters and potential insurance 
settlements are undeterminable. Given the Company's current financial 
condition, the resolution of these matters could have a material impact
on the Company's financial condition and operating results.  See Item 3, 
Legal Proceedings - Environmental Matters for additional discussion.  
   
Employees
   
As of December 28, 1997, the Company employed approximately 430 persons, 
including 60 salaried employees at corporate headquarters and plant 
locations; and approximately 370 production, warehouse and maintenance 
employees.   
   
The Collective Bargaining Agreement between the Company and the United Auto 
Workers (UAW) at the Company's Hope, Arkansas facility expired on 
April 26, 1991.  At the expiration of the contract, the Company implemented 
its final offer with respect to workers at the facility.  The union went on
strike effective September 4, 1991.  In 1996, the UAW made an unconditional 
offer to return to work.  The company continues to operate the facility with 
permanent replacements. 
   
   
   
The Collective Bargaining Agreement between the Company and the International
Brotherhood of Electrical Workers at the Company's Pennsylvania facilities 
was renewed, for a three year term, in December 1996 effective as of 
September 1, 1996. In September 1997, the International Brotherhood of 
Electrical Workers at the Company's Pennsylvania facility, reopened its 
three year contract. The reopener was to address a wage increase and was 
settled in February, 1998 with a modest increase and gain sharing program.
   
Item 2.            Properties
   
The Company's corporate headquarters are presently located at 751 Roosevelt 
Rd., Bldg. 7, Suite 110, Glen Ellyn, Illinois. It leases 3,600 square feet 
of office space at that location. The facility houses the Company's corporate
office functions, including executive administration, finance, and data 
processing.  
   
The following table sets forth certain information with respect to each of 
the Company's remanufacturing, warehousing and service facilities other than 
the corporate headquarters:
   
   
                                           Warehouse    Remanufacturing      
                                              Area           Area
Location                                   (Sq. Ft.)        (Sq. Ft)         
    
OWNED:
Beech Creek, Pennsylvania                     40,000            160,000
   
HELD UNDER INDUSTRIAL
REVENUE FINANCING ARRANGEMENTS:
   
Hope, Arkansas                                55,000            221,000
                                                                  
LEASED:
   
Fresno, California                             4,000                -0-
   
Oshawa, Ontario, Canada                        4,000                -0-
   
The Company's plants are well maintained and are in good condition and repair.
A substantial portion of the machinery and equipment has been designed by the
Company for its particular purposes and, in many instances, has been built by 
it.
   
Item 3.            Legal Proceedings
   
Environmental Matters
   
   
1.  Beech Creek, Pennsylvania Facility Soil and Groundwater Contamination.
In May, 1991, the Pennsylvania Department of Environmental Resources 
("PADER") notified the Company that there was evidence of trichloroethylene 
and trichloroethane in the soil, and possibly the groundwater under the 
Beech Creek facility.  Further, PADER was concerned that the contamination
had migrated off site. PADER demanded that the Company conduct an 
investigation to determine the source and extent of the contamination, and 
perform any required cleanup.
   
The Company retained a qualified environmental consultant, Todd Giddings & 
Associates, Inc. ("TGAI") to prepare a site investigation plan. In June of 
1992 PADER approved the investigation plan. The plan included extensive soil 
testing and groundwater monitoring. TGAI  completed the investigation in 1995.
   
Cleanup commenced in 1995 at the Beech Creek plant. Cleanup activities 
consist of the venting of volatile organic gases from soil, and the pumping 
and treating of groundwater. While there are always uncertainties in 
predicting future cleanup costs, recent experience has shown that the 
maintenance and operation of the system has been approximately $20,000 per 
year. The Company's current consultant, Advanced Resource Management 
Group, Inc. ("ARMG") currently is unable to predict how long the groundwater 
pump and treat system will have to operate. 
   
The Company is currently considering other innovative technology approaches 
and risk based site specific cleanup standards under Pennsylvania's new "Act 
Two," which might shorten the remediation period. Finally, the Beech Creek 
matter is a subject of  the insurance carrier litigation (paragraph 3 below),
and the Company has settled with one and is in settlement negotiations with 
the of balance of carriers.
   
2.  Lawson Street, City of Industry, California Cleanup Proceedings, and 
Puente Valley, California Superfund Proceeding.  The Company formerly 
operated a manufacturing facility at 825 Lawson Street, City of Industry, 
California. In response to requirements imposed by the Los Angeles Regional 
Water Quality Control Board (the "Los Angeles Board") in letters dated 
March 27, 1992, and April 18, 1994, the Company, along with another former 
lessee and a former owner of the Lawson Street property, retained an 
environmental consultant to perform a site assessment of the Lawson Street 
property. The site assessment, completed in July, 1994, revealed volatile 
organic compounds in the soil and shallow groundwater beneath the Lawson 
Street property. A site assessment report was submitted to the Los Angeles 
Board in 1995.
   
The Los Angeles Board has indicated that they will require cleanup of the 
property. It is too early to predict the cleanup methodology to be required 
by the Los Angeles Board, or the cost of the cleanup. The Company, along 
with others, has retained a consultant to prepare a remedial action plan. 
The cost of implementing the plan is estimated at approximately 
$360,000-$500,000, but the plan has not yet been submitted to or approved by 
the Board. Under the present Cost Sharing Agreement with the other two 
parties who funded the site assessment report and the Remedial Action Plan, 
the Company would be responsible for paying one-third of the cost of cleanup 
of the Lawson Street property.  The Company and the other two parties to 
this agreement are also in litigation (described in paragraph number 4 below)
with another potentially responsible party, the current property owner, for 
its fair share of these costs. This could reduce the Company's liability for 
these costs.
     
The Lawson Street property is also located within the Puente Valley Operable 
Unit of the San Gabriel Valley Superfund Site (the "Puente Valley  Site").  
The Puente Valley Site is concerned with volatile organic compounds in a deep
groundwater aquifer. The Puente Valley site and its associated potential
liability, is also a subject of the Soto litigation described below. The 
Company, and approximately 42 other potentially responsible parties, are 
parties to an Administrative Consent Order with the United States 
Environmental Protection Agency to undertake a remedial 
investigation/feasibility study ("RI/FS") of the Puente Valley Site. The 
Company entered into a separate agreement with the other Respondents to the 
Administrative Consent Order to fund the RI/FS. The Company, and the other 
two companies funding the Lawson Street property investigation are jointly 
responsible for 3.75% of the cost of the RI/FS (the Company's share of the 
Puente Valley RI/FS costs, therefore, is 1.25%). The group submitted the 
RI/FS to USEPA for its review and USEPA approved the RI/FS.  The Company
was responsible for paying approximately $50,000 toward the RI/FS, most of 
which was reimbursed by the Company's insurance carriers (see paragraph 3 
below). 
   
While it is too early to know if cleanup of the Puente Valley aquifer will be
required, or the cost of any cleanup, USEPA has published a proposed cleanup 
plan for public comment.  The proposed plans's preferred remedial alternative
is predicted to cost $27. 80 million (present value cost estimate).  It is
unclear over what period the amount would be payable.  Other remedial 
alternatives discussed in USEPA'S publication range from $0 to $68.1 million.
It is impossible to predict the Company's share of the potential cleanup 
costs, but under the previous agreement for sharing the costs of the RI/FS, 
the company's share was 1.25%.
   
3.  Litigating Against Insurance Carriers. The Company has filed a complaint 
in Illinois State Court, in DuPage County against its insurance carriers for 
a declaration that the insurance carriers are liable for all of the company's
investigation and cleanup costs at the Beech Creek, City of Industry, Puente 
Valley and Spectron Sites and for any liability in the Soto litigation.  
In 1995, the Company entered into a Partial Settlement Agreement with certain
primary insurance carriers, whereby those carriers paid the Company a 
significant percentage of its past defense and investigation costs at the
Beech Creek, City of Industry and Puente Valley Sites.  Some of those 
insurance carriers are also paying for the Company's defense, subject to a 
reservation of rights, in the Soto litigation described below. 
   
The Company also reached a partial settlement with one of its insurance 
carriers, National Union, regarding that carrier's responsibility for Beech 
Creek and Spectron (See below).  In that settlement, National Union paid the 
Company  $120,000, and received a release from the Company for its liability
for cleanup costs at those two sites.
   
The Company is also presently in settlement negotiations with most of the 
primary insurance carriers regarding partial settlement for the Company's 
liability for cleanup of the Lawson street site. Under the terms of the 
proposed settlement, the Company would also dismiss the litigation, without 
prejudice with regard to the carrier's liability for Puente Valley or any 
other site, with the right to refile at any time. 
   
4.  Soto Associates v. Lois Kipling, et al.  On April 25, 1996, Soto 
Associates (Soto), a current owner of the property located at 825 Lawson 
Street, city of Industry, California, filed a complaint in the United States 
District Court for the Central District of California against the Company, 
Lois Kipling, and Maremont Corporation, for claims arising out of the 
contamination at the Lawson Street property and at the Puente Valley  site. 
The complaint seeks relief requiring the Company and the other defendants to 
clean up the Lawson Street property, and payment for any liability associated
with the Lawson Street property and the Puente Valley site. The complaint 
also seeks damages for diminution in value of the Lawson Street property, 
attorneys' fees, and other relief.
   
The Company has entered into a Joint Defense Agreement with the other 
defendants, and along with the other defendants, has denied the allegations 
and has counterclaimed against Soto for contribution for the investigation 
and cleanup costs at the Lawson Street property and the Puente Valley site. 
Champion tendered its defense and demanded indemnification from its insurance
carriers and the carriers have been defending the Company under a reservation
of rights. 
   
The Company is presently in settlement negotiations with Soto and the 
co-defendants. Pursuant to a draft side settlement agreement between the 
defendants, the Company would be responsible initially for one-third of the 
total amount (estimated at $360,000-$500,000) subject to a possible future
reallocation. 
   
5.  Spectron, Maryland Superfund Proceeding.  The Company was notified 
in 1989 by the United States Environmental Protection Agency ("EPA") that it 
was a "potentially responsible party" ("PRP") with respect to the removal of 
hazardous substances from the Spectron, Inc. site  in Elkton, Maryland (the 
"Spectron Site"). The Company has admitted to sending about 102,000 gallons 
of liquid substances to the Spectron Site. There are about 30 million gallons
of materials sent to the site that have been accounted for. 
   
A PRP Group known as the Spectron Steering Committee ("SSC") was formed and 
in August, 1989, an Administrative Order by Consent ("Phase I Order"), 
authorizing the SSC to conduct the surface removal, and a Consent Agreement 
under which the PRPs became obligated to reimburse the EPA for its past costs 
in connection with the site, were entered into by the EPA and approximately 
ten PRPs, including several major industrial corporations.
   
The Company entered into an agreement with the Company's waste transporter, 
which selected the Spectron Site, pursuant to which the transporter paid 
one-half of the cost attributed to surface removal for the Company's waste 
sent to the Spectron Site.  The Company has paid approximately $17,000 for 
its portion of the removal. 
      
On September 20, 1995, the United States Environmental Protection Agency 
(USEPA) notified the Company (along with several hundred other companies) of 
potential liability for response actions at the Spectron Superfund Site.  
The USEPA letter asks the Company and the other PRPs to negotiate with USEPA 
for their performance of a remedial investigation/feasibility study at the 
Spectron Site. 
   
In addition to the USEPA letter, the Company received a letter from a group 
of other PRPs at the Site. Based on the allegations on the quantity of 
materials sent to the site from the Company, the allegations on materials 
sent to the Site by other PRPs, and the Steering committee PRPs' prediction 
of total costs of investigation and cleanup at the Site, the Company's share 
of the liability would be approximately $158,000. This amount would be 
payable over several years.  In addition, the Steering committee PRPs appear 
to be offering a de minimis settlement option.  Pursuit of the de minimis 
settlement option would cost the Company $229,471 to $305,961, depending on 
reopener provisions. 
   
The Company  has demanded defense and indemnity from its insurance carriers 
for any liability at the Spectron Site and one of the carriers has settled 
with the Company. The Company plans to vigorously pursue its claims against 
other insurance carriers, if necessary.  Further, the Company believes that 
its former solvent supplier and waste solvent transporter, Textile Chemical 
Company, Inc. (formerly known as R. W. Eaken), is responsible for a share of 
any liability the Company incurs for the Spectron Site cleanup. The Company 
plans to vigorously pursue Textile for the claim. 
   
6. Caldwell Systems, Inc. Site.  In February, 1998, the Company received a 
notice letter and de minimis settlement letter from USEPA regarding the 
Caldwell Systems, Inc. Site.  The Company has elected to enter into the 
de minimis settlement, under which the Company will pay $631.87 to USEPA, 
and receive a release from any further cleanup liability at the site. 
    
Summary
Although the ultimate outcome of its environmental matters and potential 
insurance settlements is not determinable, given the Company's current 
financial condition resolution of these matters could have a material impact 
on the Company's financial condition and operating results. 
   
Other Litigation
The Company is a defendant in lawsuits from trade creditors seeking payment 
of outstanding amounts. See  Management's Discussion and Analysis Part II, 
(Item 7) for further discussion.  It is uncertain as to the ultimate outcome 
of the current or threatened litigation.
   
Item 4.  Submission of Matters to a Vote of Shareholders  
   
         None
                              
                                                         
                                  PART II
                               
   
Item 5.   Market for the Company's Common Shares and Related Shareholder 
Matters
   
The Company's Common Shares are traded over the counter on the NASD 
Electronic Bulletin Board under the symbol "CREB".  As of December 28, 1997, 
there were 802 holders of record of the Company's Common Shares.  This number
does not include beneficial owners of Common Shares whose shares are held in 
the name of banks, brokers, nominees or other fiduciaries. 
   
The information appearing in the following table on the range of high and 
low trade prices for the Company's Common Shares was obtained from NASDAQ 
quotations in the NASD's Monthly Statistical Reports and NASD Quotation 
Service Reports.
   
   
                               Fiscal                        Fiscal
                             Year Ended                    Year Ended
                          December 28, 1997             December 29, 1996
   Quarter                   Low     High                 Low      High
   Ended:                   Price    Price               Price     Price
   
   March 31                  3/8      1/2                 3/16     15/16
   June 30                   3/8      1/2                 1/4        1
   September 30              9/32     3/8                11/32      1/2
   December 31               7/32     7/16                3/8       1/2
   
Under the Company's amended and restated credit agreement, the Company is not
permitted to pay dividends.
   
Only for purposes of the calculation of aggregate market value of the Common 
Shares held by non-affiliates of the Company as set forth on the cover page 
of this report, the Common Shares held by Echlin Inc., RGP Holding, Inc., 
the Company's Employee Stock Ownership Plan and Profit Sharing and Thrift 
Plan, and shares held by members of the families of the children of Elizabeth
Gross, the mother of two of the Company's directors, were included in the 
shares held by affiliates.  Certain of such persons and entities may not be 
affiliates. 
   
Item 6.
   
Selected Financial Data 
(Data in thousands, except per share data   
                            1997       1996       1995       1994       1993
   
Net Sales  (Note 1)      $ 24,165   $ 27,556   $ 52,954   $ 95,337  $ 100,040
   
Costs and Expenses:
 Operating costs (Note 2)  23,948     27,527     69,454     99,050     95,769
 Interest - net               973      1,489      2,339      2,423      2,282
                         ________   ________    _______    _______   ________
                           24,921     29,016     71,793    101,473     98,051
   
Earnings (Loss) Before 
 Income Taxes and 
 Extraordinary Gain          (756)    (1,460)   (18,839)    (6,136)     1,989
Income Taxes (Benefits)       -0-          7          1       (297)       176
                         ________   ________   ________   ________   ________   
Earnings (Loss) Before
 Extraordinary Gain          (756)    (1,467)   (18,840)    (5,839)     1,813
Extraordinary Gain (Note 3)   596        -0-        -0-        -0-        -0-
                         ________   ________   ________   ________   ________
Net Earnings (Loss)          (160)    (1,467)   (18,840)    (5,839)     1,813
                         ________   ________   ________   ________   ________

Average Common Shares
 Outstanding and Common
 Share Equivalent       3,655,266  3,655,266  3,655,266  3,655,266  3,655,266
   
Net Earnings (Loss)
 From Operations Before
 Extraordinary Gain Per
 Common Share               (0.21)     (0.40)     (5.15)     (1.60)      0.50  
                         ________   ________   ________   ________   ________

Extraordinary Gain Per
 Common Share                0.16        -0-        -0-        -0-        -0-
                         ________   ________   ________   ________   ________
   
Net Earnings (Loss) Per
 Common Share:              (0.05)     (0.40)     (5.15)     (1.60)      0.50
                         ________   ________   ________   ________   ________

AT YEAR-END
   
Total assets             $ 17,276   $ 19,666    $28,565   $ 55,312   $ 56,147
   
Long-Term Obligations
(Note 4)                 $  2,377   $     43    $   701   $   1,451  $ 19,281
   
Note 1:  In 1995 the Company adopted a plan to refocus its business and exit 
the manufacture and sale of passenger car electrical products. Sales to those
customers affected by the Company's announcement accounted for approximately 
56% of sales in 1995.
   
Note 2:  Special Charges and Restructuring Charges of $1,602,000 in 1995, and 
$3,400,000 in 1994, are included in operating costs. Included in 1995 results
are $6.1 million in write downs of inventory  due to the Company's decision 
to exit certain product lines. Included in 1994 results were $2.2 million in 
inventory provisions to revalue the Company's inventory.
   
Note 3:  On July 1, 1997, the Company reached a composition agreement with 
approximately 90% of its unsecured creditors with past due balances of 
$3.4 million.  As a result of this settlement the Company reported an 
extraordinary gain of $596,000.
   
Note 4:  In 1997, 1996, 1995 and 1994 long term obligations do not reflect 
amounts due on the bank credit agreement and other maturities.  See Note 3 
to the Company's Consolidated Financial Statements.
   
   
Item 7.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations
   
Results of Operations
                                                      
Significant Developments
   
On July 1, 1997, the Company  reached a composition agreement with over 90% 
of its unsecured trade creditors with past due balances of approximately 
$3.4 million.  Under the terms of this agreement, the Company made a cash 
distribution in the amount of 10% of the total restructured indebtedness, 
issued approximately $1.0 million in non-interest bearing promissory notes 
and issued other obligations entitling the trade creditors to a portion of 
the Company's defined free cash flow in years 2005 to 2009 of up to an 
aggregate of approximately $1.5 million. This resulted in an extraordinary 
gain of $596,000 for the year ended December 28, 1997.  Discussions are 
continuing with unsecured trade creditors with past due balances of 
approximately $214,000.
   
In addition, the Company is continuing discussions with other creditors to 
restructure approximately $1.8 million of claimed associated indebtness upon 
substantially the same terms as the settlement with the trade creditors. 
There is no assurance that any of these creditors will accept the proposal.
   
The Company's banks have indicated that they do not intend to continue to 
provide long term financing to the Company, and the Company has been asked 
to replace the current facility with another credit facility.  The current 
bank agreement expired on August 31, 1997.  The banks are at present limiting
the revolving facility to $5.2 million. The Company is seeking another credit
facility to replace the expired facility. However, there is no assurance that
the Company will secure a replacement facility.  Without a new facility the 
Company will not be able to continue as a going concern and would likely have
to seek court protection under the Bankruptcy Code.
   
1997 Compared to 1996
   
Net sales for 1997 of $24.2 million were 12% lower than 1996 net sales of 
$27.6 million. This decline in sales was primarily due to lower  product 
shipments to two major customers. In 1997, sales to the Company's six largest
customers, which accounted for 90% of total sales, were 13.1% lower than 1996
sales to these customers.
   
The Company's primary product line is remanufactured carburetors which 
accounted for 68% of 1997 net sales compared to 63% in 1996. The Company's 
main distribution channel is through two large retailers which accounted for 
84% of 1997 net carburetor sales compared to 80% of 1996 net carburetor 
sales.  The balance of the carburetor sales were to original equipment 
aftermarket customers, traditional warehouse distributors and jobbers. The 
loss of a major retail customer could have a material adverse impact on the 
Company's results and could affect the Company's ability to remain a going 
concern.
   
The Company believes it continues to be a significant supplier of carburetors
to the aftermarket.  Since the mid-1980's carburetors have been installed in 
fewer new vehicles sold in the United States due to the increased use of fuel
injection systems.  However, the Company continues to sell replacement units
for older vehicles, many of which use carburetors. Overall carburetor sales 
are declining in the U.S. market.  The Company believes that the retail 
segment will continue to expand its sales of carburetors in the future while 
the traditional channels will continue to decrease.  Factors contributing to 
this trend include the overall growth of the retailers' market share in the 
automotive parts aftermarket, consolidation of traditional distribution 
channels, price competitiveness and traditional distributors' desire to limit
their investment in the carburetor product line.  The Company has introduced 
various marketing programs in recent years, including an overnight delivery 
program, to help enhance sales to traditional distributors.
   
The Company is making efforts to increase its constant velocity joint 
business. The Company anticipates continued overall market volume growth in 
the constant velocity joint product line as the number of front wheel drive 
vehicles entering the prime repair age increases.  However, there can be no 
assurances the Company will be able to replace the  constant velocity joint 
business lost over the past years.
   
Reflected in net sales are deductions for product and core returns which were
37% and 38% of total sales in 1997 and 1996, respectively.  The lower return 
percentage in 1997 is a function of the decrease in core sales and return 
volume.  The Company has a customer product return policy to control product
and core returns.  It has also established reserves against expected future 
declining core values.
   
Cost of products sold was 85% of net sales in  1997 and 84% in 1996. This 
slight increase in cost of products sold resulted from primarily higher 
labor costs throughout the year.
   
Selling, distribution and administration expenses were $3.4 million in 1997, 
23% lower than 1996 expenses of $4.4 million.  The principal reason for the 
reduction was due to lower sales volume and corporate-wide cost control 
efforts, primarily related to professional fees and insurance costs.
   
Interest expense declined to $973,000 in 1997 from $1.5 million in 1996.  
The decline in interest expense was due to a lower level of average borrowing
compared to the prior year.  In 1997, the total bank borrowings were reduced 
by $770,000. The Company did not record a tax benefit on 1997 or 1996 losses 
due to uncertainties over the realization of tax loss carry forwards.
   
The Company reported a net loss of $160,000 after an extraordinary gain of 
$596,000. Without the extraordinary gain, the result of operations was a net 
loss of $756,000 compared to a net loss of $ 1.5 million in 1996.
   
1996 Compared to 1995
   
Net sales for 1996 were $27.6 million or 48% lower than 1995 net sales of 
$53 million.  1995 net sales included approximately $30 million in sales 
(56% of total sales) to customers affected by the Company's decision to exit 
certain product lines and the loss of three large carburetor and constant
velocity joint customers.  With the restructuring, the Company has narrowed 
its product line to certain niche markets: fuel systems, constant velocity 
joints, and certain passenger car, agricultural and heavy  duty applications.
In 1996, sales to the Company's six largest customers, which accounted for 
92% of total sales, were 35% higher than 1995 sales to these customers.  The 
increase was primarily due to those customers' reaction to the Company's 
focus on niche markets and expansion of the Company's business with them.  
The Company has also focused on expanding its business in these niche markets.
   
Reflected in net sales are deductions for product and core returns which were 
38% and 44% of total sales in 1996 and 1995, respectively.  The lower return 
percentage in 1996 is a function of the decrease in core sales and return 
volume.  1995 returns were also impacted by lost customers making final 
product and core returns in a period of declining demand.
   
Cost of products sold was 84% of net sales in 1996 compared to 94% in 1995.  
The prior year percentage was adjusted for $6.1 million in special inventory 
provisions to write down discontinued inventory to estimated net realizable 
values.  The improvement in 1996 is principally due to the increased sales 
mix to the carburetor and original equipment markets, which carry higher 
margins, compared to the 1995 sales mix.
   
Selling, distribution and administration expenses were $4.4 million in 1996, 
63% lower than 1995 expenses of $11.9 million.  The principal reason for the 
significant reduction was the downsizing of the Company's operations as a 
result of its strategic decision to exit certain product lines.  1995 results
also reflected a $1.6 million special charge related to the restructuring 
decision.
   
Interest expense declined to $1,500,000 in 1996 from $2.3 million in 1995.  
Total debt reduction was $6.6 million (47%) in 1996 as the Company sold 
inventory, equipment, and facilities related to the discontinued business.  
The Company did not record a tax benefit on 1996 or 1995 losses due to
uncertainties over the realization of tax loss carry forwards.
   
The net loss for 1996 was $1.5 million compared to $18.8 million in 1995.
      
   
Factors Which May Affect Future Results
   
This annual report contains forward looking statements that are subject to 
risks and uncertainties, including but not limited to the following:
   
The Company's revolving credit facility expired on August 31, 1997. The 
Company's banks have requested the Company to secure a credit facility with 
another lender to replace the current facility and are at present limiting 
the revolving facility to $5.2 million.  Therefore, the Company is seeking a 
replacement credit facility.  However, there is no assurance that the Company
will secure another facility.  Without a new facility, the Company will not be
able to continue as a going concern and will likely have to seek court 
protection under the Bankruptcy Code. In addition, the report of the 
Company's Independent Certified Public Accountants contains an explanatory 
paragraph, expressing substantial doubt about the Company's ability to 
continue as a going concern.
   
The Company expects the existing over-capacity in the automotive aftermarket 
and consolidation within its distribution channels to cause continued selling
price pressure for the foreseeable future.  The present competitive 
environment is causing change in traditional aftermarket distribution 
channels resulting in retailers gaining additional market presence at the 
expense of traditional wholesalers. In response, the Company has diversified 
its customer base and currently serves all major segments, including 
automotive warehouse distributors and jobbers, original equipment 
manufacturers of automotive equipment and large volume automotive retailers. 
The anticipated decline in sales from the profitable carburetor product line 
over the longer term will impact future results.  The Company will seek to 
offset these impacts through development of niche product markets, new product
development, improvements in its manufacturing processes and cost containment
with a strong focus on capacity utilization. There is no assurance that the 
Company's efforts will be successful. 
   
In 1997, the Company initiated a project to address Year 2000 issues.  The 
initial stage of this project is to address its current computer systems and 
upgrade them to Year 2000 compliances.  The Company elected to embark on a 
system conversion utilizing current technology and operating platforms and 
moving to a distributed processing structure.  This stage of the project is 
scheduled for 3rd Quarter 1998 completion at an estimated cost of $170,000.  
The Company has analyzed its products and found that there are no Year 2000
issues.  The second stage of the project is to address Year 2000 issues with 
its support operations, and its relationship with customers and vendors. 
This stage is in an investigative and inquiry phase, and is scheduled to be 
completed in the 3rd Quarter of 1999 and no costs have been estimated at 
this time.
      
The Company's six largest customers accounted for an aggregate of 90% of the 
Company's total sales in 1997.  Given the Company's current financial 
condition and its manufacturing cost structure, the loss of a large customer 
would have a materially adverse impact on the Company's results and could
affect the Company's ability to remain a going concern.  
   
While the Company has established reserves for potential environmental 
liabilities that it believes to be adequate, there can be no assurance that 
the reserves will be adequate to cover actual costs incurred or that the 
Company will not incur additional environmental liabilities in the future.  
See "Legal Proceedings" for additional information.
   
Accordingly, actual results may differ materially from those set forth in the
forward looking statements.  Attention is also directed to other risk factors
set forth in documents filed by the Company with the Securities and Exchange 
Commission.
   

Liquidity and Capital Resources.

Working Capital

Working capital at December 28, 1997, was ($7.2) million, compared to ($9.9) 
million at the end of 1996. This improvement in working capital  was 
primarily due to a vendor composition agreement, which resulted in 
approximately $3.4 million trade payables being reduced as follows:  
approximately $.4 million was paid to the vendors, $2.4 million was converted
into long-term debt,  and $.6 million was recorded as an extraordinary gain 
through the extinguishment of debt.
   
Accounts receivable at the end of 1997 were $4.5 million, down $.6 million, 
or 12%, from the previous year-end balance of $5.1 million.  The decrease was
due to higher collections and lower sales volume.
        
Net inventory at the end of 1997 decreased to $6.2 million, from $7.0 million 
at the end of the prior year as the Company reduced overall inventory levels,
particularly in its discontinued product lines.  

Compared to prior year, interest expense declined approximately $.5 million 
because of a lower level of average outstanding borrowings. In 1997, the bank
borrowings were reduced by $770,000. 
   
Debt

The Company increased  its debt by $1.6 million in 1997. The long-term debt 
increased by $2.3 million primarily due to restructuring of approximately 
$2.4 million of unsecured creditors' past due debt as long-term. 
   
As stated earlier, on July 1, 1997, the Company  reached a composition 
agreement with over 90% of its unsecured trade creditors with past due 
balances of approximately $3.4 million.  Under the terms of this agreement, 
the Company made a cash distribution in the amount of 10% of the total 
restructured indebtedness, issued approximately $1 million in non-interest 
bearing promissory notes and issued other obligations entitling the trade 
creditors to a portion of the Company's defined free cash flow in years 2005 
to 2009 of up to an aggregate of approximately $1.5 million.  These 
promissory notes and the defined free cash flow entitlements were classified 
as long-term obligations. Discussions are continuing with the remaining  
unsecured trade creditors.
   
The Company is continuing discussions  with other unsecured creditors to 
restructure approximately $1.8 million of claimed associated indebtedness 
upon substantially the same terms as the settlement with the trade creditors.
   
The Company's revolving credit facility expired on August 31, 1997.  The 
Company's banks had requested the Company to secure a credit facility with 
another lender to replace the current facility and are at present limiting 
the revolving facility to $5.2 million.  Therefore, the Company is seeking a
replacement credit facility.  However, there is no assurance that the Company 
will secure another facility.  Without a new facility, the Company will not 
be able to continue as a going concern and will likely have to seek court 
protection under the Bankruptcy Code.
   
The Company has reflected outstanding amounts under the credit agreement and 
a $1,500,000 capitalized lease obligation as current maturities in its 1997 
financial statements.
   
The Company's  wholly owned foreign subsidiary is a guarantor of Canadian 
$1.75 million of bank debt with its partner in a 50% owned Canadian venture. 
As part of the 1992 restructuring charge, the Company provided a reserve for 
contingent liability to the venture's bank.  The amount of the loan plus
accrued and unpaid interest was Canadian $935,000 at December 28, 1997.
   
The Company's financial statements have been prepared on a going concern 
basis and do not contain adjustments which may be necessary should the 
Company be forced to liquidate assets or take other actions to satisfy debt 
payments or discontinue its business.
   
Recent Accounting Pronouncements
   
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, 
"Reporting Comprehensive Income".  The new standard discusses how to report 
and display comprehensive income and its components.  This standard is 
effective for years beginning after December 15, 1997. When the Company 
adopts this statement, it is not expected to have a material impact on the 
presentation of the Company's financial statements.
   
In June 1997, the Financial Accounting Standards Board issued SFAS  No. 131, 
"Disclosures About Segments of an Enterprise and Related Information".  This 
standard requires enterprises to report information about operating segments,
their products and services, geographic areas, and major customers.  This 
standard is effective for years beginning after December 15, 1997. When the
Company  adopts this statement, it is not expected to have a material impact 
on the presentation of the Company's financial statements.  
      
   
Item 8.   Financial Statements and Supplementary Data
   
The financial statements and supplementary data called for by this item are 
listed in the accompanying table of contents for consolidated financial 
statements and financial statement schedule and are filed herewith.
   
   
Item 9.   Changes in and Disagreements with Accountants and Accounting and
          Financial Disclosure
   
None
   
                               PART III
                                
ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

           (a)  Directors and Executive Officers of Registrant
          
           Persons elected as directors of the Company  hold office until 
           the next annual meeting of shareholders at which directors are 
           elected.
   
           The by-laws of the Company provide that officers shall be elected 
           by the board of directors at its first meeting after each annual 
           meeting of shareholders, to hold office until their successors 
           have been elected and have qualified.
   
                        Principal Occupation                     Served as
                         and Positions with                      a Director
      Name (Age)                                                the Company  
                                                                   Since     
          
John R. Gross (66)        Owner, Chaney Auto Parts, Inc.,             1966
                          Crest Hill, Illinois                       
   
Raymond Gross (59)        Vice President, Erecta Shelters, Inc.,      1968
                          Ft. Smith, Arkansas
   
Gary S. Hopmayer (58)     Director, Original American Scones, Inc.,   1987
                          Chicago, Illinois 
   
Barry L. Katz (46)        President and General Counsel, Belmont      1993
                          Holdings Corp.   
   
Edward R. Kipling (66)    Retired                                     1987
   
Raymond G. Perelman (80)  Chairman of the Board and Chief Executive   1988
                          Officer, RGP Holding, Inc.,                
                          Philadelphia, Pennsylvania and Belmont
                          Holdings Corp., Bala Cynwyd, Pennsylvania
   
Jerry A. Bragiel (46)     President and CEO of the Company                  
   
Roland H. Millington (51) Treasurer and Secretary of the Company             
       
Mr. Bragiel joined the Company in May, 1997 as President and CEO of the 
Company. He held the positions of General Manager and Vice President of 
Business Development of IPM Products Corporation from 1994 to 1997. Prior to 
1994, Mr. Bragiel had 20 years of employment with the Company in  various 
capacities. His final position prior to his resignation from the Company 
in 1994 was Vice President and General Manager of Operations. 
   
Roland H. Millington joined the Company in  July 1996 as Manager of Finance. 
In July 1997, he was appointed to Secretary and Treasurer of the Company. 
Prior to joining the Company, Mr. Millington held the position of Assistant 
Controller with SoloPak Pharmacueticals Inc. from 1989-1995.  Mr. Millington 
resigned on June 5, 1998 in order  to accept a CFO position with another 
Company. 
   
In April 1997, Mr. Thomas W. Blashill resigned as President, CEO and 
Director. In June 1997, Mr. Mark Smetana resigned as Vice President of 
Finance and the Secretary  of the Corporation.  Mr. Richard B. Hebert also 
resigned from his Treasurer position during the same month.
   
Mr. John R. Gross is currently the owner of Chaney Auto Parts, Inc., a 
retailer of auto parts.  John R. Gross is the brother of Raymond F. Gross.
   
Mr. Raymond F. Gross has been the Vice President of Erecta Shelters Inc., a 
manufacturer and distributor of metal buildings, since 1985.  He has also 
been a consultant to the Company since June, 1984.  Prior to June, 1984
he was a Vice President of the Company.  Raymond F. Gross is the brother of 
John R. Gross. 
   
Mr. Hopmayer was President of Original American Scones, Inc., a privately 
owned specialty baker, from 1987 to 1993.  He is currently a Director of 
Original American Scones, Inc.  Prior to that time he was President of Mega 
International, Inc. a manufacturer and distributor of automotive electrical 
parts.  Mega International, Inc., founded by Mr. Hopmayer, was sold to 
Echlin Inc. in October, 1986.
   
Mr. Katz has served as a director of the Company since December 1993.  From 
December 16, 1992 to January 19, 1993 he held the position of Senior Vice 
President of the Company.  Since 1993 Mr. Katz has been President and General
Counsel for RGP Holding, Inc., and was its Senior Vice President and General 
Counsel since May 1992.  From March 1990 to  1994, he served as Senior Vice 
President and General Counsel for General Refractories Company, and since 
that time has been its President.  Since 1994 Mr. Katz has been President and
General Counsel for Belmont Holdings, Corp., a Company with subsidiaries 
operating mining and processing businesses.

Mr. Kipling was Vice President and General Manager of the Rayloc Division of 
Genuine Parts Company, a remanufacturer of automotive parts, for more than 
five years prior to January, 1987, and has since been retired.
   
Mr. Perelman had served as Chairman of the Board from December 16, 1992 until 
November 1995 and was President and Chief Executive Officer from December 16,
1992 to January 19, 1993.  He has been Chairman of the Board of RGP Holding, 
Inc., a privately-held holding Company, since May 1992.  Since 1985, he was 
the Chairman of the Board and Chief Executive Officer of General Refractories
Company.  Since 1994,  Mr. Perelman has been Chairman of the Board and CEO of
Belmont Holdings, Corp., a Company with subsidiaries operating mining and 
processing businesses.
   
(b)  Arrangements Concerning the Board of Directors
   
Except for directors who are officers of the Company, each director received 
a fee of $10,000 for service as a director during the Company's fiscal year 
ended December 28, 1997.  In addition, directors are reimbursed for their 
reasonable travel expenses incurred in attending meetings and in connection 
with Company business. The Company has an indemnification agreement with each
director of the Company that provides that the Company shall indemnify the 
director against certain claims that may be asserted against him by reason of
serving on the Board of Directors.
   
Messrs. Hopmayer and Kipling were originally nominated to serve as directors 
pursuant to a Stock Purchase Agreement dated March 18, 1987 between the 
Company and Echlin Inc.  See "Ownership of Voting Securities" below for 
additional information concerning Echlin Inc. 
   
Mr. Katz serves as a director at the request of  Mr. Perelman and pursuant to
an agreement between Mr. Perelman, RGP Holdings, Inc. and the Company. 
(See Item 12, Note 2 regarding this agreement).
   
   
ITEM 11.       EXECUTIVE COMPENSATION
   
(a)    Executive Officer Compensation and Arrangements
   
Executive Compensation
   
The following table sets forth information with respect to all compensation 
paid to the Company's Chief Executive Officer.  There were no other 
executives whose compensation exceeded $100,000 for services rendered in all 
capacities to the Company, during 1997.
   
   
                                   Long Term   Compensation                  
                                   ________________________
                Annual   Compensation                Awards     Payout
                _____________________              _________   _______     
   (a)         (b)     ( c )     (d)    (e)   (f)      (g)       (h)    (l)
                                                     Securities             
Name                               Other   Restricted Underly-  LTIP    All
and              Year Salary Bonus Annual    Stock      ing    Payouts Other
Principal         No.  ($)     ($) Compen-  Award (s)  Options    ($) Compen-
Position                           sation     ($)       /SAR's       sation(2)
                                    (1)                   #             ($)
                                     $
Jerry A. Bragiel 1997  112,492 -0-  ---       -0-      25,000    -0-     -0-
President and
Chief Executive
Officer (Note 2)
   
   
   
(1)    The  amounts are below  threshold reporting requirements.
                           
(2)    Mr. Bragiel was hired as President and CEO in May 1997.
   
Mr. Bragiel has a severance compensation agreement with the Company that 
provides for severance pay equal to six months salary following termination 
from the Company. 
   
The by-laws of the Company provide that officers shall be elected annually by
the board of directors at its first meeting after each annual meeting of 
shareholders, to hold office until their successors have been elected and 
have qualified. 
   
The Company also has an indemnification agreement with each officer of the 
Company that provides that the Company shall indemnify the officer against 
certain claims which may be asserted against him by reason of serving as a 
officer of the Company.
      
Shown below is information with respect to stock options granted during the 
year ended December 28, 1997.
   
                                                                Potential 
                                                                Realizable
                        Percentage                            Value at Assumed
               Option    of Total                             Rates of Stock
              Granted    Options    Exercise                Price Appreciation
            (in common  Granted to  or Base                     for Option    
             shares)     Employees  Price                     
Name                     in 1997   per Share Expiration Date   Term ($)  (b)
____________ ________ ____________ _________ _______________ ________________
                                                                 5%      10%
                                                              _______  _______
Jerry A. 
Bragiel, CEO   25,000      25%       $.4375       03/28/02     $3,022   $6,677
   
( a )  The grant was made on March 28, 1997 with an exercise price equal to 
the market price at that time. These options are immediately exercisable.
   
( b )  Under the rules and regulations of the SEC, the potential realizable 
value of a grant is the product of ( I ) the difference between ( x ) the 
products of the per share market price at the time of grant and the sum of 1 
plus the adjusted stock price appreciation rate (the assumed rate of 
appreciation compounded annually over the term of the option) and ( y ) the 
per share exercise price of the option and ( ii ) the number of securities 
underlying the grant at year-end. Assumed annual rates of stock price
appreciation of 5% and 10% are specified by the SEC and are not intended to 
forecast possible future appreciation, if any, of the price of the shares of 
Common Stock of the Company. (For example, if the price of shares of Common 
Stock remained at the exercise price of the options, (i.e. a 0% appreciation
rate), the potential realized value of the grant would be $0). The actual 
performance of such shares may be significantly different from the rates 
specified by the SEC.    
   
The following table provides certain information with respect to the number 
and value of unexercised options outstanding as of December 28, 1997.  
(No options were exercised  by the named executive officer during 1997.)
   
   Aggregated 1997 Option Exercises and December 28, 1997 Option Values
   
                                                  Number of
                                                  Securities       Value of
                                                  Underlying      Unexercised
                                                  Unexercised    In-the-Money
                   Shares                           Options/       Options/
                  Acquired                       Exercisable/    Exercisable/
Name            on Exercise(#) Value Realized($) Unexerciable   Unexercisable  
______________  ______________ _________________ ____________   _____________
   
Jerry A. 
 Bragiel, CEO          0                0            25,000/0         $0/$0
   
   
All outstanding options were out of the money at December 28, 1997.
   
   
Compensation Committee Interlocks and Insider Participation
   
Messrs. Perelman, Kipling and John Gross presently serve as members of the 
Compensation Committee.  None of these members was an officer or employee of 
the Company, a former officer of the Company, or a party to any relationship 
requiring disclosure under Item 404 of SEC Regulation S-K during 1997.
   
(b)    Director Compensation Arrangements  
   
Information regarding director compensation is set forth under Item 10(b) 
above.
   
   
   
Item 12:    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
   
The following tabulation shows, as of March 7, 1998, (a) the name, address 
and Common Share ownership for each person known by the Company to be the 
beneficial owner of more than five percent of the  Company's outstanding 
Common  Shares,   (b) the  Common  Share  ownership of each  director, 
( c ) the Common Share ownership for each executive officer named in the 
compensation table, and (d) the Common Share ownership for all directors and 
executive officers as a group.  
   
                                    Number of Common
                                   Shares Beneficially     Percent of Common
                                        Owned (1)         Shares Outstanding
Beneficial Owner
   
RGP Holding, Inc.
 225 City Line Avenue
 Bala Cynwyd, Pennsylvania 19004           661,600 (2)         18.1% (2)
   
Echlin Inc.
 100 Double Beach Road
 Branford, Connecticut 06405               600,000 (3)         16.4% (3)
   
John R. Gross,
 Director (6)                              108,212              3.0%
   
Champion Parts, Inc.
 Employee Stock Ownership Plan
 c/o Champion Parts, Inc.
 751 Roosevelt Rd.
 Bldg. 7, Suite 110
 Glen Ellyn, IL 60137                       48,893 (4)          1.3% (4)
   
Raymond F. Gross,
 Director (6)                               31,164               *
   
Gary S. Hopmayer,
 Director (3)                                ----               ----
   
Barry L. Katz,
 Director (2)                                  250               *
    
Edward R. Kipling,
 Director (3)                                2,000               *
   
Raymond G. Perelman,
 Director                                  661,600 (2)         18.1% (2)
   
Jerry A. Bragiel                                              
 President and CEO                          13,984               *
                                   
Roland H. Millington
 Secretary/Treasurer                         ----               ----
   
All directors and executive officers
 as a group (8 persons) (5)                803,226              22.0%
   
* Not greater than 1%.
   
   
   
(1)    Information with respect to beneficial ownership is based on 
information furnished to the Company or contained in filings made with the 
Securities and Exchange Commission.
   
(2)    RGP Holding, Inc. is indirectly controlled by Mr. Perelman.  Pursuant 
to an agreement between the Company, Mr. Raymond G. Perelman and RGP Holding,
Inc. dated September 20, 1993 and amended October 9, 1995  Mr. Perelman and 
RGP granted to the proxy holders appointed by the Board of Directors of the 
Company the proxy to vote all shares beneficially owned by them, including 
shares held by any affiliates (the "Perelman Shares"), for the election of 
certain nominees.  Mr. Perelman and RGP have also agreed, among other things,
not to solicit proxies in opposition to such nominees. 
   
(3)    All shares owned by Echlin Inc. ("Echlin") are subject to a Stock 
Purchase Agreement dated March 18, 1987 between the Company and Echlin.  
Under the Stock Purchase Agreement, Echlin may vote its shares in its 
discretion. During the fiscal year ended December 28, 1997, the Company
purchased approximately $750,000 of components used in the remanufacture of 
automotive parts from Echlin.  On March 9, 1992, Echlin notified the Company 
that it was exercising its limited market protection rights under the Stock 
Purchase Agreement.  Accordingly, the Company issued a $2,400,000 promissory 
note to Echlin which had been paid to Echlin in quarterly installments of 
$200,000.  The note carries an interest rate of 1% above prime.  In April 
1995, the Company defaulted on the final installment of this note.  It 
subsequently paid $100,000 in 1995 and in 1997 the remaining $100,000 was 
settled by means of the vendors' composition agreement.
   
Messrs. Hopmayer and Kipling were originally nominated as directors pursuant 
to the Stock Purchase Agreement.
   
(4)    Shares held by this plan are voted by Mr. Jerry A. Bragiel as trustee.
Employees participating in the Stock Ownership Plan are entitled to direct 
the trustees as to the voting of shares allocated to their accounts. 
Unallocated Stock Ownership Plan shares will be voted in the  same manner,
proportionately, as the allocated Stock Ownership Plan shares for which 
voting instructions are received from employees.  For more information 
concerning the ownership and voting of shares held by the Stock Ownership 
Plan and the trustees, see note (5) below.
   
(5)     Does not include 48,893  shares allocated to the accounts of 
employees other than executive officers. Each of the participants in the 
Stock Ownership Plan is entitled to direct the trustees as to the voting of 
shares allocated to his or her account.  
   
(6)    As of March 7,  1998 Elizabeth Gross, her children and members of 
their immediate families beneficially owned 200,000 Common Shares, or 
approximately 5.5% of the Common Shares outstanding.  John R. Gross and 
Raymond F. Gross,  children of Elizabeth Gross, are directors of the Company.
   
   
Item 13.    Certain Relationships and Related Transactions

Information required under this Item 13 is set forth above under  Part III, 
Item 12, Notes (2) and (3) and in Part III, Item 11, Compensation Committee 
Interlocks and Insider Participation.
   
   
                          PART  IV
                                                               
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
   
(a)  Consolidated Financial Statements and Schedule and Exhibits: 
   
(1. and 2.) The consolidated financial statements and schedule listed in the
accompanying table of contents for consolidated financial statements are 
filed herewith. 
   
(3.) The exhibits required by Item 601 of Regulation S-K and filed herewith 
are listed in the exhibit index which follows the consolidated financial 
statements and financial statement schedule and immediately precedes the 
exhibits filed.  Pursuant to Regulation S-K, Item 601(b)(4)(iii), the Company
has not filed with Exhibit (4) any instrument with respect to long-term debt 
(including individual bank lines of credit, mortgages and instruments
relating to industrial revenue bond financing) where the total amount of 
securities authorized thereunder does not exceed 10% of the total assets of 
the Registrant and its subsidiaries on a consolidated basis.  The Company 
agrees to furnish a copy of each such instrument to the Securities and 
Exchange Commission on request.
   
     (b)  Reports on Form 8-K:      None

                                SIGNATURES
                               
Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this report to be 
signed on its behalf by the undersigned, thereunto duly authorized.
   
                    CHAMPION PARTS, INC. 
                               
   
Date: June 17, 1998                   By:  /s/ Jerry A. Bragiel 
_________________________             _____________________________________
                                      Jerry A. Bragiel
                                      President and Chief Executive Officer
                                      and Principal Financial Officer
                                   
   
Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on June 17, 1998.
   
   
By:   /s/ Jerry A. Bragiel                   By:   /s/ Gary S. Hopmayer  
___--________________________                __________________________  
Jerry A. Bragiel, President                  Gary S. Hopmayer, Director
   
   
By :                                         By:   /s/ Edward R. Kipling  
_____________________________                ___________________________
Raymond G. Perelman, Director                Edward R. Kipling, Director
                      
   
By :                                         By:   /s/ Raymond F. Gross  
_____________________________                ____________________________
Barry L. Katz, Director                      Raymond F. Gross, Director
   
   
By:  /s/ John R. Gross                       By:   /s/ Taskin Akman
_____________________________                _____________________________
John R. Gross, Director                      Taskin Akman
                                             Corporate Controller
                                         
   
   
                     CHAMPION PARTS, INC. AND SUBSIDIARIES
   
Consolidated Financial Statements and Financial Statement Schedule comprising
Item 8  and Items  14(a)(1)  and  (2)  for  the Years  Ended December 28, 
1997,  December 29, 1996, and December 31, 1995 and Report of Independent 
Certified Public Accountants.
   
   
   
CHAMPION PARTS, INC. AND SUBSIDIARIES TABLE OF CONTENTS                      
                                                                           

                                                                   Page
                                                                  ______   

Report of Independent Certified Public Accountants                   31
   
Consolidated Financial Statements (Item 14(a)(1)):
   
The following consolidated financial statements of  
 Champion Parts, Inc. and subsidiaries are included in 
 Part II, Item 8:
   
Consolidated balance sheets - December 28, 1997 and                     
 December 29, 1996                                                 32-33
   
Consolidated statements of operations - years ended 
 December 28, 1997, December 29, 1996 and December 31, 1995          34
    
Consolidated statements of stockholders' equity (deficit) - 
 years ended December 28, 1997, December 29, 1996 and 
 December 31, 1995                                                   35
          
Consolidated statements of cash flows - years ended
 December 28, 1997, December 29, 1996 and December 31, 1995          36
   
Notes to consolidated financial statements                         37-52
   
Consolidated Financial Statement Schedule (Item 14(a)(2)):                   
   
Schedule II - Valuation and qualifying accounts                      53
   
All other schedules are omitted because they are not applicable, not 
required, or because the required information is included in the consolidated
financial statements or notes thereto.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
   
To the Board of Directors of
Champion Parts, Inc.
Glen Ellyn, Illinois
   
We have audited the accompanying consolidated balance sheets of Champion 
Parts, Inc. and Subsidiaries as of December 28, 1997 and December 29, 1996 
and the related consolidated statements of operations, stockholders' equity, 
and cash flows for each of the three years in the period ended December 28, 
1997.  We have also audited the 1997, 1996 and 1995 schedule listed in the 
accompanying index.  These financial statements and schedule are the 
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
   
We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements and 
schedule are free of material misstatement.  An audit includes examining, on 
a test basis, evidence supporting the amounts and disclosures in the 
financial statements and schedule.  An audit also includes assessing the 
accounting principles used and significant estimates made by management, as 
well as evaluating the overall presentation of the financial statements and 
schedule.  We believe that our audits provide a reasonable basis for our 
opinion.
   
In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Champion 
Parts, Inc. and Subsidiaries at December 28, 1997 and December 29, 1996 and
the results of their operations and their cash flows for each of the three 
years in the  period ended December 28, 1997 in conformity with generally 
accepted accounting principles.
   
Also, in our opinion, the 1997, 1996 and 1995 schedule present fairly, in 
all material respects, the information set forth therein. 
   
The accompanying financial statements have been prepared assuming that the 
Company will continue as a going concern.  As discussed in Note 2 to the 
financial statements, the Company has suffered recurring losses from
operations and has a deficiency in stockholders' equity.  In addition, the 
Company is in default under the terms of its revolving credit facility with 
its banks. The banks have requested that the Company secure a credit facility
with another lender. The Company has yet to secure long-term financing with a
new lender  and has not paid various unsecured creditors under the terms of 
sales.  The Company does not have the ability to pay these debts should the 
lenders demand payment. These factors raise substantial doubt about the 
Company's ability to continue as a going concern.  Management's plans in 
regard to these matters are also discussed in Note 2.  The financial
statements do not include any adjustments that might result from the outcome 
of this uncertainty.
   
/s/ BDO Seidman, LLP
   
   
   
Chicago, Illinois
April 9 , 1998
   
   
   
CHAMPION PARTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 
   
   
   
                                        December 28, 1997   December 29, 1996
                                        _________________   _________________
 
ASSETS
   
CURRENT ASSETS:
   
   Cash                                       $   488,000         $   707,000
   Accounts receivable, less allowance
    for uncollectible accounts of
    $448,000 and $795,000 in 1997 and
    1996, respectively                          4,497,000           5,129,000
   
   Inventories                                  6,192,000           7,040,000
   
   Prepaid expenses and other assets              342,000             252,000
   
   Deferred income tax asset                      417,000             561,000
                                             ____________        ____________   
     Total current assets                      11,936,000          13,689,000
   
   PROPERTY, PLANT AND EQUIPMENT:
   
   Land                                           259,000             259,000
   Buildings                                    7,821,000           7,821,000
   Machinery and equipment                     12,675,000          12,603,000
   Leasehold improvements                             -0-             509,000
                                             ____________        ____________
                                               20,755,000          21,192,000
   
   Less:  Accumulated depreciation             15,473,000          15,683,000
                                             ____________        ____________
                                                5,282,000           5,509,000
     OTHER ASSETS                                  58,000             468,000
                                             ____________        ____________
                                             $ 17,276,000        $ 19,666,000 
                                             ============        ============
          
   
   The accompanying notes are an integral part of these statements.
   
   
   
   
LIABILITIES AND STOCKHOLDERS' EQUITY      December 28, 1997 December 29, 1996
____________________________________      _________________ _________________
                    
   
   CURRENT LIABILITIES:
   
   Accounts payable                            $  5,479,000      $  8,047,000
   Accrued expenses:
   Salaries, wages and employee
    benefits                                        778,000           891,000
   Other accrued expenses                         5,805,000         6,914,000
   Taxes other than income                          285,000           228,000
   Current maturities of long-term debt           6,773,000         7,550,000
                                               ____________      ____________
     Total current liabilities                   19,120,000        23,630,000
   
   DEFERRED INCOME TAXES                            351,000           478,000
   
   LONG-TERM DEBT - Less current maturities       2,377,000            43,000
   
   STOCKHOLDERS' EQUITY (DEFICIT):
   
     Preferred stock - No par value;
      authorized, 10,000,000 shares:
      issued and outstanding, none                      -0-               -0-
   
     Common stock - $.10 par value;
      authorized, 50,000,000 shares:
      issued and outstanding, 3,655,266             366,000           366,000
     Additional paid-in capital                  15,578,000        15,578,000
     Retained deficit                           (19,888,000)      (19,728,000)
     Cumulative translation adjustment             (628,000)         (701,000)
                                               ____________      ____________
                                                 (4,572,000)       (4,485,000)
                                               ____________      ____________
                                               $ 17,276,000      $ 19,666,000
                                               ============      ============

   
   
    The accompanying notes are an integral part of these statements.


CHAMPION PARTS, INC. AND SUBSIDIARIES
   
CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED
   
   
                                    December 28,  December 29,   December 31,
                                        1997          1996           1995
   
   NET SALES                        $ 24,165,000  $ 27,556,000   $ 52,954,000
   
   COST AND EXPENSES:
    Cost of products sold             20,549,000    23,145,000     55,920,000
    Selling, distribution and  
     administration                    3,399,000     4,382,000     11,932,000
    Special charges                          -0-           -0-      1,602,000
                                    ____________   ___________   ____________
                                      23,948,000    27,527,000     69,454,000
                                    ____________   ___________   ____________
                                      
   EARNINGS (LOSS) BEFORE INTEREST
    INCOME TAXES & EXTRAORDINARY GAIN    217,000        29,000    (16,500,000)
   INTEREST EXPENSE                      973,000     1,489,000      2,339,000
                                    ____________   ___________   ____________
   LOSS BEFORE INCOME TAXES 
     AND EXTRAORDINARY GAIN             (756,000)   (1,460,000)   (18,839,000)
   INCOME TAXES                              -0-         7,000          1,000
                                    ____________   ___________   ____________   
   LOSS BEFORE   EXTRAORDINARY GAIN     (756,000)   (1,467,000)   (18,840,000)
   EXTRAORDINARY GAIN                    596,000           -0-            -0-   
                                    ____________   ___________   ____________
                            
   NET LOSS                         $   (160,000)  $(1,467,000)  $(18,840,000)  
                                    ============   ===========   ============
                                                                               
   WEIGHTED AVERAGE SHARES
    OUTSTANDING                        3,655,266     3,655,266      3,655,266
                                     ===========    ==========    ===========
   NET LOSS FROM  OPERATIONS
    BEFORE EXTRAORDINARY
    GAIN PER COMMON SHARE            $     (0.21)   $    (0.40)   $    (5.15)
                                     ===========    ==========    ===========
             
   EXTRAORDINARY GAIN PER
    COMMON SHARE                     $      0.16    $      -0-    $       -0-
                                     ===========    ==========    ===========
   
   NET LOSS PER  COMMON SHARE        $     (0.05)   $    (0.40)   $    (5.15)
                                     ===========    ==========    ===========

   The accompanying notes are an integral part of these statements.
   
                               
CHAMPION PARTS, INC. AND SUBSIDIARIES
                                                                  
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 28, 1997, DECEMBER 29, 1996, AND DECEMBER 31, 1995
   
(Data in thousands of Dollars)
                                 Additional  Retained  Cumulative  Guarantee
                         Common   Paid-in    Earnings  Translation  of ESOP
                         Stock    Capital   (Deficit)  Adjustment  Borrowings
                        _______  _________  _________  __________  __________
BALANCE, JANUARY 1,1995 $   366  $  15,578  $     579  $    (645)  $    (514)
                                                                  
Net Loss                                      (18,840)

Exchange rate changes                                          53
   
Contribution to ESOP
  fund ESOP debt                                                          514
                        _______  _________  _________  __________  __________   
BALANCE, 
  DECEMBER 31, 1995     $   366  $  15,578  $ (18,261) $    (592)  $      -0-
   
Net loss                                      ( 1,467)
   
Exchange rate changes                                        (109)
                        _______  _________  _________  ___________  _________
                                                               
BALANCE, 
 DECEMBER 29, 1996      $   366  $  15,578  $ (19,728)  $    (701)  $     -0-
   
Net loss                                         (160)
   
Exchange rate changes                                          73         
                        _______  __________  _________  __________  _________
   
BALANCE, 
 DECEMBER 28,1997       $   366  $  15,578  $ (19,888)  $   (628)   $    -0-
                        =======  =========  ==========  ==========  =========
                                              
                         
   
    The accompanying notes are an integral part of these statements.


CHAMPION PARTS, INC. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS - YEARS ENDED
   
                                      December 28  December 29,  December 31,
                                          1997         1996          1995
   
CASH FLOWS FROM OPERATING ACTIVITIES:
   
Net loss                               $ (160,000) $ (1,467,000) $(18,840,000)
Adjustments to reconcile net              
 loss to net cash provided  by
 operating activities:
  Extraordinary Gain                     (596,000)          -0-           -0-
  Depreciation and amortization           773,000       965,000     1,477,000
  Provision for losses on accounts
   receivable                                 -0-         6,000       704,000
  Provision for Inventory write offs      315,000           -0-     6,100,000
  Special charges                             -0-           -0-     1,602,000
  Deferred income taxes                    17,000        50,000       379,000
Changes in assets and liabilities:
  Accounts receivable                     632,000      (398,000)    7,424,000
  Inventories                             533,000     3,662,000    10,049,000
  Accounts payable                        422,000       727,000      (848,000)
  Accrued expenses and other             (852,000)     (403,000)     (667,000)
                                       __________    __________   ___________
     Net cash provided (used) by 
      operating activities              1,084,000     3,142,000     7,380,000 
                                       __________    __________   ___________
   
CASH FLOW FROM INVESTING ACTIVITIES:
  Capital expenditures                   (561,000)      (47,000)     (122,000)
  Proceeds from sale of property,
   plant and equipment                     22,000     3,419,000        42,000 
                                       __________    __________   ___________

NET CASH PROVIDED (USED) BY INVESTING
 ACTIVITIES                              (539,000)    3,372,000       (80,000)
                                       __________    __________   ___________

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (payments) under
   line of credit agreement              (773,000)   (5,701,000)   (6,271,000)
  Principal payments on long-term
   debt obligations                       (64,000)     (869,000)     (529,000)
                                       __________    __________   ___________
  
NET CASH USED BY FINANCING ACTIVITIES   ( 837,000)   (6,570,000)   (6,800,000)

EFFECTS OF EXCHANGE RATE CHANGES
 ON CASH                                   73,000      (111,000)       28,000
                                       __________    __________   ___________
   
NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                        (219,000)     (167,000)      528,000 
CASH AND CASH EQUIVALENTS -
 Beginning of year                        707,000       874,000       346,000
                                      ___________    __________   ___________
CASH AND CASH EQUIVALENTS -
 End of year                          $   488,000    $  707,000   $   874,000 
                                      ===========    ==========   ===========
   
    The accompanying notes are an integral part of these statements.


CHAMPION PARTS, INC. AND SUBSIDIARIES
   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 1997,  DECEMBER 29, 1996 AND DECEMBER 31, 1995
   
1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The Company operates on a 52 week fiscal calendar.

Consolidation Policy - The consolidated financial statements include the 
accounts of Champion Parts,Inc. and its subsidiaries (the "Company").  All 
significant intercompany transactions and balances have been eliminated in 
consolidation. 
   
Accounts Receivable - From time to time the Company's customers may be in a 
net credit balance position due to the timing of sales and core returns.  At 
December 28, 1997 and December 29, 1996 customers in a net credit balance 
position totaled approximately $3,800,000 and $3,000,000, respectively, and 
are reported as a component of accounts payables.  Merchandise purchases are
normally used to offset net credit balances. 
   
Inventories - Inventories are stated at the lower of cost (first-in, 
first-out method) or market.  Inventory consists of material, labor and 
overhead costs. 
   
Property, Plant and Equipment - Property, plant and equipment are carried at 
cost, less accumulated depreciation.  The assets are being depreciated over 
their estimated useful lives, principally by the straight-line method.  The 
range of useful lives of the various classes of assets is 10-40 years for
buildings and 4-10 years for machinery and equipment.  Leasehold improvements
are amortized over the terms of the leases or their useful lives, whichever 
is shorter. 
   
In 1995, the Company recorded approximately $350,000 of provision to write 
down certain property and equipment to estimated net realizable values in 
connection with its decision to exit certain product lines.
   
Expenditures for maintenance and repairs are charged to operations; major 
expenditures for renewals and betterments are capitalized and depreciated 
over their estimated useful lives. 
   
Excess of Purchase Price Over Net Assets Acquired - The Company is amortizing
the excess of purchase price over net assets acquired over a 25-year period. 
The unamortized amount of goodwill was $19,000 and $18,000 in 1997 and 1996, 
respectively.  The accumulated amortization was $36,000 and $30,000 in 1997 
and 1996, respectively.
   
Deferred Charges - Costs of issuing long-term debt are deferred and amortized
over the terms of the related issues. 
   
Line of Business - The Company remanufactures and distributes replacement 
fuel systems components, constant velocity joint assemblies, charging and 
starting components and other functional replacement parts principally for 
the passenger car, agricultural and heavy duty  aftermarket industry in the 
United States and Canada, which is considered to be a single line of business. 
   
Revenue Recognition - The Company recognizes sales when products are shipped.
Net sales reflect deductions for cores (used units) returned for credit and 
other customary returns and allowances.  Such deductions and returns and 
allowances are recorded currently based upon continuing customer 
relationships and other criteria.  The Company's customers are encouraged to 
trade-in re-buildable cores for products which are included in the Company's 
current product line.  
   
Credits for cores are allowed only against purchases of similar 
remanufactured products.  Total available credits are further limited by the 
dollar volume of purchases.  Product and core returns, reflected as 
reductions in net sales, were $14,700,000 (1997), $17,300,000 (1996) and 
$43,500,000 (1995).
   
Translation of Foreign Currencies -The Company follows the translation policy
as provided by Statement of financial accounting Standards Board No. 52. 
Accordingly, assets and liabilities are translated at the rates of exchange 
on the balance sheet dates.  Income and expense items are translated at the 
average exchange rates prevailing throughout the years.  The resultant 
translation gains or losses are included as a component of stockholders' 
equity designated as " cumulative translation adjustments".  Gain and losses 
from foreign currency transactions are included in net income and are not 
significant.
   
Net Income (Loss) per common share - In February 1997, the Financial 
Accounting Standards Board issued Statement of Financial Accounting Standards
("SFAS") No.128 "Earnings Per Share", which the Company has adopted.  
Pursuant to SFAS 128, the Company has replaced the reporting of "primary" 
earnings per share ("EPS") with "basic" EPS.  Basic EPS is calculated by 
dividing the income (loss) available to common shareholders by the weighted 
average number of common shares outstanding for the period, without 
consideration for common stock equivalents. "Fully diluted" EPS has been 
replaced with "diluted" EPS which is determined similarly to fully diluted 
EPS under the provisions of APB Opinion No. 15.
   
For all periods presented in the Consolidated Statements of Operations, the 
effect of including stock options and warrants would have been antidilutive. 
Accordingly, basic and diluted EPS for all periods presented are equivalent.
   
Estimates - The accompanying financial statements include estimated amounts 
and disclosures based on management's assumptions about future events.  
Actual results may differ from these estimates.
   
Recent Accounting Pronouncements -  In June 1997, the Financial Accounting 
Standards Board issued SFAS No. 130, "Reporting Comprehensive Income".  The 
new standard discusses how to report and display comprehensive income and 
its components.  This standard is effective for years beginning after
December 15, 1997.  When the Company adopts this statement, it is not 
expected to have a material impact on the presentation of the Company's 
financial statements.
   
In June 1997, the Financial Accounting Standards Board issued SFAS  No. 131, 
"Disclosures About Segments of an Enterprise and Related Information".  This 
standard requires enterprises to report information about operating segments,
their products and services, geographic areas, and major customers.  This 
standard is effective for years beginning after December 15, 1997. When the
Company  adopts this statement, it is not expected to have a material impact 
on the presentation of the Company's financial statements.  
   
2.     GOING CONCERN
   
The accompanying consolidated financial statements have been prepared on the 
assumption that the Company will continue as a going concern and therefore 
assume the realization of the Company's assets and the satisfaction of its 
liabilities in the normal course of operations.
   
As discussed in Note 5 below, the Company is in default under the terms of 
its revolving credit facility with its banks. The banks have requested that 
the Company secure a credit facility with another lender. The Company has yet
to secure long-term financing with a new lender. Additionally, in part 
because of that default and the resulting inability to obtain additional 
working capital, the Company has been unable to make timely reductions in the
amount owed to its product suppliers and, as a consequence, is currently in 
negotiation with a few vendors for payment of amounts owed to them.
   
The Company's  ability to continue as a going concern is ultimately dependent
on its ability to increase sales to a level that will allow it to operate 
profitably and generate positive operating cash flows. Although the reduction
of expenses, which was begun in the last half of fiscal 1995 and is 
continuing in fiscal 1997, can contribute to the necessary return to 
profitability, achieving profitability without an increase in sales would 
require much greater levels of expense reductions and in all likelihood could
only be accomplished through a significant reduction and restructuring of the 
nature and scope of the Company's operations.
   
The Company's sales have been adversely affected by its lack of working 
capital and liquidity; accordingly, to increase sales the Company must first 
resolve its working capital shortage. 
   
Management believes that the completion of a restructuring of its bank 
financing  would allow it to reduce outstanding trade debt, obtain trade 
credit and resolve the negotiations discussed above. Those
steps, taken together, would, in the opinion of management, allow the Company
to achieve sales increases by reducing the limiting effects that the 
Company's lack of working capital have had on marketing and the ability to 
obtain the products necessary to accept and fill customer orders on a timely
basis. The increases in sales would ultimately allow the Company to return to
profitability and generate positive cash flows.
   
There can be no assurance that a definitive agreement for the elimination of 
the amounts outstanding under the expired credit facility can be reached or 
if one is reached, that the Company would be able to obtain the necessary 
new debt and equity financing to settle the expired credit facility. There 
can be no assurance that the completion of such a restructuring would allow 
the Company to increase its sales.  The failure of any of these steps would 
force the Company to significantly reduce its operations in order to reduce 
expenses or take other significant actions to resolve its liquidity 
constraints.
   
The Company's financial statements have been prepared on a going concern 
basis and do not contain adjustments which may be necessary should the 
Company be forced to liquidate assets or take other actions to satisfy debt 
payments or discontinue its business.
   
3.   EXTRAORDINARY GAIN
   
On July 1, 1997, the Company reached a composition agreement with over 90% of
its unsecured trade creditors with past due balances of approximately $3.4 
million. Under the terms of this agreement, the Company made a cash 
distribution in the amount of 10% of the total restructured indebtedness, 
issued approximately $1.0 million in non-interest bearing promissory notes 
and issued other obligations entitling the trade creditors to a portion of 
the Company's defined free cash flow in years 2005 to 2009 of up to an 
aggregate of approximately $1.5 million. This resulted in an extraordinary 
gain of $596,000 for the year ended December 28, 1997. Discussions are 
continuing with unsecured trade creditors with past due balances of 
approximately $214,000.
   
In addition, the Company is continuing discussions with other creditors to 
restructure approximately $1.8 million of claimed associated indebtedness 
upon substantially the same terms as the settlement with the trade creditors.
There is no assurance that any of these creditors will accept the proposal.
   
   
4.  INVENTORIES
   
Inventories consist of the following:

                                      December 28,      December 29,
                                          1997              1996
   
   Raw materials                      $  1,867,000     $  1,753,000
   Work in process                       2,641,000        2,622,000
   Finished goods                        1,684,000        2,665,000
                                     _____________     ____________
                                      $  6,192,000     $  7,040,000
   
Included in inventories were cores of $2,460,000 (1997) and $2,984,000 (1996).
   
In 1995 the Company recorded a $6,100,000  provision in cost of products sold 
to reflect the Company's decision to exit the manufacturing and sale of 
automotive electrical and mechanical products to traditional warehouse 
distributors and retailers.  Write downs reflect losses realized and expected
to be realized on liquidating the inventory made excess by this decision. 
Included in inventories above were reserves of  $997,000  (1997) and 
$2,009,000 (1996) related to discontinued product lines.
   
5.  DEBT

Debt consists of the following:                    December 28,  December 29,
                                                       1997          1996
   
Bank loan, revolving credit at prime
 (8.50% at December 28, 1997) plus 3-1/2%
  payable on demand secured by receivables,
  inventory and certain other assets               $  5,155,000  $  5,928,000

Note payable, converted in 1997 into a
 promissory and earnout notes payable
 in connection with the vendor composition
 agreement                                                  -0-       100,000
   
Capitalized lease obligations under Industrial
 Revenue Bonds, at approximately 60% of prime
 rate, due in 2001, varying annual sinking
 fund payments commencing in 1998                     1,500,000     1,500,000
   
Promissory notes payable, non-interest bearing,
 payable in 24 equal payments starting from
 June 1998                                              940,000           -0-
   
Earnout notes payable, non-interest bearing,
 contingent to the availability of defined
 free cash flow, payable up to $500,000
 annually in years 2005-2009                          1,554,000           -0-
   
Other                                                     1,000        65,000
                                                    ___________    __________
                                                      9,150,000     7,593,000
Less portion due within one year                      6,773,000     7,550,000
                                                    ___________    __________
                                                    $ 2,377,000    $   43,000
                                                    ===========    ==========

   
Long-term debt maturities (including obligations under capital leases) are 
$6,773,000 (1998), $156,000 (1999), $156,000 (2000), $156,000 (2001), 
$156,000 (2002) and $1,753,000 (after 2002).
   
Under the bank loans, the Company gave a security interest to the 
participating banks in its accounts receivable, inventories, certain real 
estate and other assets.  The Company agreed to pay interest on outstanding 
borrowings at the Prime Rate plus 3-1/2% and an annual commitment fee of 1/2%
of the facility.
   
The Company's revolving credit facility expired on August 31, 1997.  The 
Company's banks have requested the Company to secure a credit facility with 
another lender to replace the current facility and are at present limiting 
the revolving facility to $5.2 million.  Therefore, the Company is seeking a 
replacement credit facility.  However, there is no assurance that the Company
will secure another facility.  Without a new facility, the Company will not 
be able to continue as a going concern and will likely have to seek court 
protection under the Bankruptcy Code.
   
The Company has reflected outstanding amounts under the credit agreement and 
a $1,500,000 capitalized lease obligation as current maturities in its 1997 
financial statements.
   
Without a replacement facility, the Company would not have sufficient funds 
to pay its debts should the lenders demand payment and would not be able to 
continue as a going concern.  The Company is in the process of seeking a 
replacement credit facility.  There is no assurance that the Company will 
secure a replacement facility.
   
The carrying amount of long-term debt (excluding the restructured troubled 
debt) approximates fair value because the interest rates on substantially 
all the debt fluctuate based on changes in market rates.
   
6.  INCOME TAXES
   
The Company uses an asset and liability approach that requires the 
recognition of deferred tax assets and liabilities for the expected future 
tax consequences of events that have been recognized in the Company's 
financial statements or tax returns. 
   
The income tax provision (benefit)  consists of the following:
   
   CURRENT                      1997              1996               1995 
                        
   Federal                  $ (8,000)         $(50,000)       $  (379,000)
   Foreign                       -0-               -0-                -0-  
   State and local             1,000             7,000              1,000
                           _________         _________       ____________
                           $  (7,000)        $ (43,000)       $  (378,000)
   DEFERRED
   
   Federal                 $   7,000         $  50,000        $  (378,000)
   Foreign                       -0-               -0-                -0-
   State and local               -0-               -0-                -0-
                           _________         _________        ___________
                           $   7,000         $  50,000        $  (378,000)
                           _________         _________        ___________
                           $     -0-         $   7,000        $       -0- 
                           =========         =========        ===========

   
The Company has provided a valuation reserve to write-down deferred tax 
assets due to uncertainty of its ability to utilize them in future periods.
   
At December 28, 1997 the Company had federal, state and foreign net operating
loss carry forwards of $16,274,000, $563,000 and $548,000, respectively.  
Federal loss carry forwards begin to expire in 2010.  The Company also had 
$520,000 of tax credits which can be carried forward indefinitely.
   
The effective tax rate differs from the U.S. statutory federal income tax 
rate of 34% as described below:
   
                                      1997             1996            1995 
   
Income tax (benefit) at
 statutory rate                  $ (54,000)      $ (499,000)    $ (6,406,000)
Valuation  allowance                53,000          499,000        6,406,000
State income taxes
 net of federal income tax           1,000            7,000            1,000
                                 _________       __________     ____________
                                 $     -0-       $    7,000     $      1,000
   
Deferred tax assets and liabilities are comprised of the following at 
December 28, 1997 and December 29, 1996
                                                      
                                           1997                    1996
                              ________________________ ______________________
                                Assets    Liabilities   Assets   Liabilities
                              __________  ___________ __________ ___________
Inventory reserves            $1,881,000              $2,649,000
Accrued vacation                 215,000                 215,000
Fringe benefits                1,370,000               1,819,000
Depreciation                                 302,000                  378,000
Bad debts                         83,000                  83,000
Write-off of foreign 
  subsidiary                     547,000                 547,000
Restructuring Reserves           154,000                 542,000
Environmental                   319,000                  305,000
Net operating loss carry 
  forward                      6,499,000               5,123,000
Tax credit carry forward         520,000                 495,000
  Valuation allowance        (11,465.000)            (11,262,000)
Other                            294,000      49,000      45,000      100,000
                             ___________  __________  __________  ___________ 
                             $   417,000  $  351,000  $  561,000  $   478,000
                             ===========  ==========  ==========  ===========
   
   
7.  SPECIAL CHARGES
   
In 1995, the Company recorded a special charge of $1,602,000 to reflect its 
decision to exit the manufacture and sale of automotive electrical 
(alternators and starters) and mechanical (clutches and water pumps) products
to warehouse distributors and retailers in the United States and Canada.  
These charges included $710,000 in write downs of equipment, goodwill and 
recognition of wind down costs, $662,000 in termination benefits and $230,000
in estimated costs to exit contractual liabilities.  The Company also recorded
$6,100,000 in inventory adjustments as a component of cost of products sold 
to write down the inventory in these product lines to estimated net 
realizable values.  Adjustments to these provisions may be necessary in 
future periods based on further development of restructuring costs.  At 
December 31, 1995 the Company had $500,000 reserve to meet future cost.  The
remaining balance of $132,000, at the end of 1996, was used to cover the 
associated expenses in 1997.  Sales to customers affected by the Company's 
decision accounted for approximately 56% of 1995 sales.
   
8.  EMPLOYEE STOCK OPTION AND AWARD PLANS
   
1995 Stock Option Plan - On November 16, 1995, the Company's shareholders 
approved a 1995 Stock Option Plan.  This plan provides for options to 
purchase up to 100,000 shares. Participants in the plan shall be those 
employees selected by the Compensation Committee of the Board of Directors.
   
Options shall be granted at the fair market value of the Company's Common 
Stock at the date of grant.  No option may be exercised until six months 
after the grant date or after 10 years after the grant date.  The options 
vest ratably over a period not to exceed five years.
   
Effective January 1, 1996, the Company adopted the disclosure provisions of 
SFAS No. 123, "Accounting for Stock-Based Compensation".  If the alternative 
accounting-related provisions of SFAS No. 123 had been adopted as of the 
beginning of 1995, the effect on 1995, 1996 and 1997 income before taxes and 
net income would have been immaterial.
   

Information with respect to stock options outstanding under this plan  is as 
follows:
   
                                1997            1996           1995 
   
Granted                          25,000        15,000          55,000
Average Option Price            $ .4375       $  1.00         $ 0.625
   
At Year End:
Shares Underlying Options        25,000        70,000          55,000
Exercisable                      25,000        70,000             -0-
Available for Grant              75,000        30,000          45,000
   
1982 Incentive Stock Option Plan - During 1982, the stockholders approved the
1982 Incentive Stock Option Plan.  The plan provided options to purchase 
93,750 shares at prices equivalent to the fair market value at the date of 
grant for officers and other key employees.  Options became exercisable,
in whole or part, one year from the date of the grant.  No options were 
exercised under this plan in 1995, 1994 and 1993 and all options outstanding 
have expired.
   
On March 28, 1997 (the "Grant Date"), the Company granted its President and 
Chief Executive Officer an option to purchase 25,000 Common Shares at a price
of $.4375 per share.  The option may be exercised immediately and will expire 
in five years from the Grant Date, subject to earlier termination of his 
employment.  As of December 28, 1997 he had not exercised any of these 
options.
   
9.  EMPLOYEE RETIREMENT AND SAVINGS PLANS
   
Salaried employees with one or more years of service are eligible to 
participate in  an Employee Stock Ownership Plan ("ESOP"), which was 
established in 1986.  The plan provides for graduated vesting of 
participants' interests with full vesting upon completion of the fifth year 
of service.  The ESOP shares were fully distributed in 1995. 
   
Salaried employees with one year of service are eligible to participate in a 
401(k) plan ("Thrift Program").  Under this program, contributions are 100% 
vested.  
   
Hourly employees of three facilities are covered under the Company's 
noncontributory pension plans or under a union-sponsored plan to which the 
Company contributes.  The benefits are based upon years of service.  The 
Company's contribution consists of an amount to annually fund current service
costs and to fund past service costs over 30 years.  The Company's funding 
policy for these plans is to meet, at a minimum, the annual contributions 
required by applicable regulations. 
   
In connection with the Company's 1995 restructuring plans (See Note 7),  
curtailment losses of $40,000  were included in the special charges.

The following table sets forth the plans' funded status and amounts 
recognized in the Company's balance sheets for its pension plans:
   
                                December 31, 1997         December 31, 1996
                                _________________         _________________
                                   Accumulated              Accumulated
                                    Benefits                  Benefits
                                  Exceed Assets             Exceed Assets 
                                _________________         __________________
   
Actuarial present value of 
  benefit obligations:
    Vested benefit obligation        $  7,500,000               $  6,562,000
    Non-vested benefit obligation          26,000                     14,000 
   
    Accumulated benefit obligation      7,526,000                  6,576,000 
   
    Plan assets at fair value, 
     primarily equity funds             7,134,000                  6,094,000 
   
    Projected benefit obligations in
     excess of plan assets               (392,000)                  (482,000)
   
    Unrecognized net (gain) from past
     experience different from that
     assumed and effects of changes 
     in assumptions                       (984,000)                 (836,000)
   
    Unrecognized prior service cost         79,000                    85,000
   
    Unrecognized net (obligation) asset
     at January 1, 1988 being recognized
     over 18 to 26 years                     4,000                     2,000
   
    Adjustment to recognize minimum
     liability                                 -0-                       -0-

                                        ____________           _____________   
    Accrued pension cost included in
     accrued expenses                   $ (1,293,000)          $  (1,231,000)
                                        ============           =============   

The weighted average discount rates used in determining the  actuarial 
present  value  of the projected benefit obligation at December 31, 1997 and 
December 31, 1996, were 7.00% and 7 1/2% respectively.  The expected rate of 
return on assets was 8.5%.  No projected wage increases are included in the 
calculation of the projected benefit obligation as the pension plan benefits 
are not based upon wage levels; rather benefit payments will be equal to the 
number of years of benefit service multiplied by a factor as defined by each 
benefit plan. <PAGE>
Pension cost for 1997, 1996 and 1995 consists of the following:
   
                                             1997          1996        1995
   
Service cost - benefits earned 
  during the period                    $  143,000     $ 124,000    $ 149,000
   
Interest cost on projected 
  benefit obligation                      485,000       458,000      432,000
   
Actual return on plan assets           (1,251,000)     (705,000)  (1,192,000)
   
Net amortization and deferral             695,000       233,000      790,000 
                                       __________    __________   __________
                                       $   72,000    $  110,000   $  179,000  
                                       __________    __________   __________
   
10.    LEASES
   
The Company leases certain plants and offices, and computer equipment. 
Certain of the real estate leases, constituting non-financing leases, have 
provisions for renewal. These lease renewals are primarily for five years. 
Obligations under capital leases are included as a part of long-term debt.
   
Total rental expense charged to operations was $216,000 (1997), $365,000 
(1996), and $621,000 (1995).
   
Minimum commitments under all noncancelable operating leases at December 28, 
1997 for the following five years are as follows:
   
                         Year             Amount  
                         1997           $  251,000
                         1998              245,000
                         1999               75,000
                         2000               74,000
                         2001               64,000
                                        __________
                         TOTAL          $  709,000
                                        ==========
                                                  
   
11.    SALES TO MAJOR CUSTOMERS
                                                                  
In 1997, sales to the Company's four largest customers were approximately 
38%, 19%, 18% and 12% of net sales.  In 1996, sales to the Company's four 
largest customers were approximately 37%, 17%, 14% and 14% of net sales.  
In 1995 sales to the Company's three largest customers were approximately
14%, 13% and 12% of net sales.  At December 28, 1997 accounts receivable 
balances of the Company's four largest customers were approximately 26%, 25%,
21% and 14% of total gross receivables.  At December 29, 1996 accounts 
receivable balances of the Company's four largest customers were 
approximately 20%, 16%, 9% and 4% of total gross receivables.
   
Given the Company's current financial condition and its manufacturing cost 
structure, the loss of a large customer could have a materially adverse 
impact on the Company's results and could affect the Company's ability to 
remain a going concern.
   
12.    RELATED PARTY TRANSACTIONS
   
On March 9, 1992, Echlin, Inc. exercised its market value rights under a 1992
stock purchase agreement with the Company.  The Company reduced its 
Additional Paid-In Capital by $2,400,000 and recorded a note payable of the 
same amount which is being paid to Echlin in quarterly installments of 
$200,000.  The note carried an interest rate of 1% above prime. In 1997, the 
balance of the note payable was restructured in conjunction with the vendor 
composition agreement (Notes 3 and 5).
   
Total purchases from Echlin approximated $750,000, $1,175,000, and $2,030,000
in 1997, 1996, 1995, respectively, of which $23,000, $634,000, and $631,000 
were unpaid at year end 1997, 1996 and 1995 respectively. 
   
13.   ENVIRONMENTAL MATTERS
   
The Company is subject to various Federal, state and local environmental laws
and regulations incidental to its business.  The Company continues to modify,
on an ongoing basis, processes that may have an environmental impact. 
   
The Company has been named, along with a number of other companies, as a 
Potentially Responsible Party in several Federal and state sites where the 
Company had operations or where byproducts from the Company's manufacturing 
processes were disposed.  The current landowner at a former plant site has 
sued the Company and two other parties.  The plaintiff is seeking judgment 
that the Company and co-defendants cover the costs to remediate the plant 
site and related costs of a Federal cleanup action and unspecified damages.  
The Company and its insurance carriers have agreed to provide a defense,
with a reservation of rights.  Three of the sites are currently active, and 
the others have been settled or are dormant.  The Company has undertaken 
voluntary actions at its current plant sites ranging from periodic testing 
to modest amounts of soil and water remediation and storage tank removal.
      
The Company has $938,000 in reserves for anticipated future costs of pending 
environmental matters at December 28, 1997.  Such costs include the Company's
estimated allocated share of remedial investigation/feasibility studies and 
clean-up and disposal costs.  No recoveries from insurance policy coverage or
other third parties has been recorded.  The Company's ultimate costs are 
subject to further development of existing studies and possible readjustment 
of the Company's pro rata share of total costs.
   
14.    INVESTMENTS
   
The Company has a 50% equity investment in a foreign joint venture.  The 
Company, through a wholly owned foreign subsidiary, is a joint and several 
guarantor of Canadian $1.75 million of bank debt with its partner in a 50% 
owned Canadian venture.  The amount of the loan plus accrued and unpaid 
interest was Canadian $935,000  at December 28, 1997.   In 1992, the Company 
wrote off its investment in the venture and provided a reserve for a 
contingent liability  to exit this venture.  The Company accounts for this 
venture using the equity method.  Given the venture's current financial 
situation and the pending guarantees from the Company, the Company has 
continued to record its investment at a zero estimated net realizable value 
and maintain a reserve for additional contingent financial exposure.
   
15.   OTHER ACCRUED EXPENSES.
   
Other accrued expenses consist of the following:
   
                                            December 28,        December 29,
                                                1997                1996      
                                          ______________      ______________   
Interest                                  $    173,000        $     240,000
Workers' compensation                        2,195,000            2,374,000
Pension (See Note 8)                         1,293,000            1,231,000
Medical insurance                              (12,000)             248,000
Deferred compensation                              -0-              608,000
Rebates                                         56,000               57,000
Environmental costs                            938,000              898,000
Restructuring                                   22,000              132,000
Joint venture                                  802,000              802,000
Other items                                    338,000              324,000 
                                          ____________        _____________
                                          $  5,805,000        $   6,914,000 
                                          ============        =============
   
      
16.    SUPPLEMENTAL CASH FLOW INFORMATION
   
Cash paid during the year for interest and income taxes was as follows:
   
                                         1997          1996          1995
   
Interest                           $1,040,000    $1,461,000    $ 2,237,000
Income taxes                              -0-           -0-         86,000
   
Supplemental Schedule of Noncash Investing and Financing Activities:
   
In 1997, as a result of the vendor composition agreement (see Note 3), 
approximately $2.5 million of trade payables were restructured into long-term
notes payable; the extinguishment of the troubled debt resulted in an 
additional $596,000 of trade payables being forgiven, thus, resulting in an 
extraordinary gain.
   
   
CHAMPION PARTS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
   
                                               Additions to/
                     Balance at     Charged    (Deductions)      Balance
                     Beginning         to         From           at End
                     of Period     Operations   Reserves        of Period
                    ____________   __________  ______________  _________
ALLOWANCE FOR
UNCOLLECTIBLE
ACCOUNTS:
   
Year Ended
December 31, 1995     $  465,000   $  704,000   $  546,000 (1)  $ 1,715,000
   
Year Ended
December 29, 1996     $1,715,000   $    6,000   $ (926,000)     $   795,000 
   
Year Ended
December 28, 1997     $   795,000  $      -0-   $ (347,000)     $   448,000 
   
   
(1)    Represents a reclassification of previously established reserves.
   
                                                    Additions to/
                        Balance at     Charged      (Deductions)   Balance
                        Beginning         to           From         at End
                        of Period     Operations     Reserves      of Period
                      _____________  _____________  _____________ ___________
INVENTORY RESERVE
   
Year Ended
December 31, 1995     $ 4,284,000   $ 6,100,000(1)   $   71,000   $10,455,000
   
Year Ended
December 29, 1996     $10,455,000   $       -0-      $(3,797,000) $ 6,658,000

Year Ended
December 28, 1997     $ 6,658,000   $   315,000      $(2,299,000) $ 4,674,000
   
(1)  Represents a provision to reflect the Company's decision to discontinue 
certain products and exit certain markets (See Note 4)
                              
                              
                              
                          CHAMPION PARTS, INC.
                            EXHIBIT INDEX
                              __________
   
(Pursuant to Item 601 of Regulation S-K)                               Total
                                                                       Pages
                                                           
NO.    DESCRIPTION AND PAGE OR INCORPORATION REFERENCE
Articles of Incorporation and By-Laws
   
(3)(a) Articles of Incorporation (incorporated by reference to 
Registrant's Quarterly Report on Form 10-Q for the quarter ended 
June 30, 1988)
   
(3)(b) By Laws (incorporated by reference to Registrant's current 
report on Form 8-K filed June 5, 1997)     
     
Instruments Defining the Rights of Security Holders, Including Indentures
   
(4)(a) Stock Purchase Agreement dated March 18, 1987 between the 
Registrant and Echlin Inc. (incorporated by reference to Registrant's 
Annual Report on Form 10-K for the fiscal year ended 
December 31, 1986)
   
(4)(b) Agreed Final Judgment Order dated January 5, 1988 entered 
by the United States District Court for the Northern District of 
Illinois, Case No. 86 C 8906 (incorporated by reference to 
Registrant's Current Report on Form 8-K dated December 29, 1987)
   
(4)(c) Agreement dated December 29, 1987 by and among the Company, 
Nicole M. Cormier, Claude A. Cormier and Daniel O. Cormier 
(incorporated by reference to Registrant's Current Report on 
Form 8-K dated December 29, 1987)
   
(4)(d) Agreement dated April 28, 1987 between the Registrant and 
Scott Hodes (incorporated by reference to Registrant's Annual Report 
on Form 10-K for the fiscal year ended December 31, 1987)
   
(4)(e) Specimen of Common Share Certificate (incorporated by reference 
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988)

                                                                        Total
                                                                        Pages
(4)(f) Articles of Incorporation (see Exhibit (3)(a) above)
   
(4)(g) By-Laws (see Exhibit (3)(b) above).  
   
(With respect to long-term debt instruments, see "Item 14. Exhibits, 
Financial Statement Schedules, and Reports on Form 8-K".)
   
(4)(h) Term of Series A Redeemable Cumulative Convertible Voting 9% 
Preferred Shares (Incorporated by reference to Registrant's Form 
8-K filing dated March 23, 1995.)
   
Material Contracts
   
(10)(a) Continuing Unconditional Guaranty dated February 12, 1988 
by the Company of indebtedness of Charles P. Schwartz, Jr. and Leonard 
D. O'Brien (now Kevin J. O'Connor), as trustees of the Champion Parts, 
Inc. Employee Stock Ownership Trust, to the Exchange National Bank of 
Chicago (now LaSalle National Bank) (incorporated by reference to 
Registrant's Annual Report on Form 10-K for the fiscal year ended 
December 31, 1987)
   
(10)(b) Amended and Restated Indemnification Agreement dated as 
of August 17, 1989 between the Registrant and Charles P. Schwartz, Jr. 
(incorporated by reference to Registrant's Annual Report on Form 10-K 
for the fiscal year ended December 31, 1989) (1)
   
(10)(c) Agreement dated as of December 28, 1983 between Registrant 
and Raymond F. Gross (incorporated by reference to Registrant's 
Annual Report on Form 10-K for the fiscal year ended 
December 31, 1983) (1)
    
(10)(d) 1984 Stock Bonus Plan, amended as of October 20, 1988 
(incorporated by reference to Registrant's Annual Report on Form 10-K 
for the fiscal year ended December 31, 1988)  (1)
   
(10)(e) 1982 Incentive Stock Option Plan, as amended November 19, 
1987 (incorporated by reference to Registrant's Current Report on 
Form 8-K dated November 19, 1987)(1)
   
(10)(f) Form of Incentive Stock Option Agreement and Schedule of 
Incentive Stock Option Agreements executed by executive officers of 
the Registrant (incorporated by reference to Registrant's Annual 
Report on Form 10-K for the fiscal year ended December 31, 1988)(1)
   
(10)(g) Amended and Restated Employment and Deferred Compensation 
Agreement dated as of June 7, 1989, between Registrant and Charles P. 
Schwartz, Jr. (incorporated by reference to Registrant's Annual Report 
on Form 10-K for the fiscal year ended December 29, 1991)(1)
                                                                                
                                                                        Total
                                                                        Pages
     
(10)(h) Agreement dated as of June 7, 1989 between the Registrant and 
Robert C. Mikolashek (incorporated by reference to Registrant's Annual 
Report on Form 10-K for the fiscal year ended December 29, 1991) (1)
   
(10)(I) Agreement dated December 16, 1992 between the Registrant and 
Charles P. Schwartz, Jr. (incorporated by reference to Registrant's 
Current Report on Form  8-K dated December 16, 1992)(1)
   
(10)(j) Amended and Restated Credit Agreement dated as of March 31, 
1993 among the Registrant, LaSalle National Bank (the successor to 
Exchange National Bank of Chicago), NBD Bank, N.A., American National 
Bank and Trust Company of Chicago, and Harris Trust and Savings Bank
(assignee of The Northern Trust Company) (Incorporated by reference 
to Registrant's Annual Report on Form 10-K for the fiscal year ended 
January 3, 1993.)
   
(10)(k) Security Agreement dated as of March 31, 1993 by and between 
the Registrant and LaSalle National Bank acting as collateral agent 
for NBD Bank, N.A., American    National Bank and Trust Company of 
Chicago, and Harris Trust and Savings Bank (Incorporated by reference 
to Registrant's Annual Report on Form 10-K for the fiscal year ended 
January 3, 1993.)
                                                                     
(10)(l) Settlement Agreement dated November 23, 1993 between Registrant 
and Charles P. Schwartz, Jr. (Incorporated by reference to Registrant's 
current report on Form 8-K dated November 23, 1993).(1)
   
(10)(m)Form of Letter from Registrant to LaSalle National Bank (the 
Successor of Exchange National Bank of Chicago), NBD Bank, N.A., and 
Harris Trust and Savings Bank  (assignee of The Northern Trust Company) 
dated March 14,1994 (incorporated by  reference to Registrant's Annual 
Report on Form 10-K for the year ended January 2, 1994).
   
(10)(n) First Amendment to Amended and Restated Credit Agreement 
dated March 30, 1994 among Registrant, LaSalle National Bank (the 
successor of Exchange National Bank of Chicago), NBD Bank, N.A., and 
Harris Trust and Savings Bank  (assignee of The Northern Trust Company). 
(Incorporated by reference to Registrant's Annual Report on Form 10-K 
for the year ended January 2, 1994).                                         
              
                                                                        Total 
                                                                        Pages
   
(10)(o) Indemnification Agreement dated as of March 8, 1994 between 
the Registrant and Donald G. Santucci and Schedule of Indemnification
Agreements executed by directors and executive officers of the 
Registrant. (Incorporated by reference to Registrant's Annual Report 
on Form 10-K for the year ended January 2, 1994).  (1)
   
(10)(p) Agreement, as amended, between Registrant and Raymond G. 
Perelman dated September 20, 1993 (incorporated by reference to 
Registrant's current Report on Form 8-K dated March 7, 1994.)
                                                                  
(10)(q) Supply Agreement dated March 18, 1987 between the Registrant 
and Echlin Inc. (incorporated by reference to the Registrant's Annual 
Report on Form 10-K for the fiscal year ended December 31, 1988)
   
(10)(s) Settlement Agreement between Registrant and Charles P. 
Schwartz, Jr. (Incorporated by reference to the Registrant's Current 
Report on Form 8-K dated November 23, 1993.)
   
(10)(t) Agreement between Registrant and Raymond G. Perelman dated 
September 20, 1993. (Incorporated by reference to the Registrant's 
Current Report on Form 8-K dated March 7, 1994.)  
       
(10)(u) Second Amendment to Amended and Restated Credit Agreement dated
March 31, 1995 among Registrant, LaSalle National Bank (the successor 
of Exchange National Bank of Chicago), NBD Bank, N.A., and Harris Trust
and Savings Bank (assignee of The Northern Trust Company).  
(Incorporated by reference to the  Registrant's Annual Report on 
Form 10-K for the year ended January 1, 1995).
   
(10)(v) Letter Agreement between the Registrant and Mr. Raymond G. 
Perelman dated February 21, 1995 (incorporated by reference to the 
Registrant's Current Report on Form 8-K filed February 21, 1995).
   
(10)(w) Preferred Stock Purchase Agreement between the Registrant 
and Mr. Raymond G. Perelman dated March 23, 1995 (incorporated by 
reference to the Registrant's Current Report on Form 8-K dated 
March 23, 1995).
   
(10)(x) Third Amendment to the Amended and Restated Credit Agreement 
dated  August 4, 1995 among Registrant, LaSalle National Bank (the 
successor of Exchange National Bank of Chicago), NBD Bank, N.A., and 
Harris Trust and Savings Bank (assignee of The Northern Trust Company).
(Incorporated by reference to Form 10-Q filed August 23, 1995)
                                                   
   
                                                                        Total
                                                                        Pages
     
(10)(y) Letter Agreement dated October 9, 1995 between Registrant 
and RGP Holding, Inc. (Incorporated by reference to form 10-Q filed
November 24, 1995.)
   
(10)(z) 1995 Stock Option Plan as of November 1, 1995. (Incorporated 
by reference to Registrant's 1995 Proxy). (1)
   
(10)(aa) Severance Agreement dated March 28, 1997 between the 
Registrant and Jerry A. Bragiel  (Included herein on page 53) (1)
   
(10)(bb) Severance Agreement dated March 28, 1997 between the 
Registrant and Roland H. Millington.(Included herein on page 53) (1) 
     
(10)(cc) Employment and Stock Option Agreement between the registrant 
and Jerry A. Bragiel dated March 28, 1997 (Included herein on 
Page 53) (1).
     
(10)(dd) Fourth Amendment to Amended and Restated Credit Agreement 
dated January 8, 1996 among Registrant, LaSalle National Bank, 
(the successor of Exchange National Bank of Chicago), NBD Bank, N.A., 
and Harris Trust and Savings Bank (assignee of The Northern Trust 
Company). (Incorporated by reference to Current Report on Form 8-K 
filed January 25, 1996.)
   
(10)(ee) Fifth Amendment to Amended and Restated Credit Agreement 
dated May 20, 1996 among Registrant, LaSalle National Bank, (the 
successor of Exchange National Bank of Chicago), NBD Bank, N.A., 
and Harris Trust and Savings Bank assignee of The Northern Trust 
Company).
   
(10)(ff) Eleventh Amendment to Amended and Restated Credit Agreement 
dated August 30, 1996 among Registrant, LaSalle National Bank, (The 
successor of Exchange National Bank of Chicago), NBD Bank, N.A., and 
Harris Trust and Savings Bank (assignee of The Northern Trust Company).
   
(10)(gg) Sixteenth Amendment to Amended and Restated Credit 
Agreement dated on  May 30, 1997 expiring on August 31, 1997 among 
Registrant, LaSalle National Bank, (The successor  of Exchange National 
Bank of Chicago), NBD Bank, N.A.,  and Harris Trust  and Savings Bank 
(assignee of The Northern Trust Company Subsidiaries).                          
                                                  
                                                                        Total
                                                                        Pages
   
(10)(hh) Settlement Agreement dated July 1, 1997 between the Registrant 
and Unsecured Trade Creditors (Incorporated by reference to Current 
Report on Form 8-K July 30, 1997).
   
(21)   List of Subsidiaries of Registrant (incorporated by reference 
to Registrant's Annual Report on Form 10-K for the fiscal year ended 
December 29, 1991)
   
Additional Exhibits
   
(27) Financial Data Schedules
   
Note:  (1) Denotes management contract or compensatory plan or 
arrangement required to be filed as an Exhibit to this report pursuant 
to item 601 of Regulation S-K.
                          ________
                                   
                                   
Champion Parts, Inc. will furnish any of the above exhibits for which 
total number of pages is indicated above, to requesting security 
holders upon payment of a photocopying charge of $.10 per page, and
a postage charge of $.32 for the first seven pages or fewer and $.23 
for each additional seven pages or fewer, subject to adjustment for changes 
in postal rates.
   

   
SIXTEENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT         
   
This Sixteenth  Amendment to Amended and Restated Credit Agreement (this 
"Sixteenth Amendment") is made and entered into as of the 30th day of 
May, 1997, by and among Champion Parts, Inc., an Illinois corporation (the 
"Company"), LaSalle National Bank, a national banking association 
("LaSalle"), as successor to both Exchange National Bank of Chicago and 
American National Bank and Trust Company of Chicago, NBD Bank ("NBD"), and 
Harris Trust and Savings Bank, an Illinois banking corporation ("Harris") 
[LaSalle, NBD and Harris are each a "Bank" and collectively, together with 
their respective successors and permitted assigns, the "Banks"], and LaSalle
in its capacity as both Agent and Collateral Agent for the Banks. 
   
W I T N E S S E T H:
   
WHEREAS, the Banks have provided certain extensions of credit, loans and 
other financial accommodations to the Company pursuant to (a) that certain 
Amended and Restated Credit Agreement dated as of March 31, 1993, by and 
among the Company, the Banks, the Agent and the Collateral Agent, as amended,
modified or supplemented from time to time (collectively the "Credit 
Agreement"), (b) (I) that certain Reimbursement Agreement dated as of 
December 1, 1991, by and between the Company and NBD (the "IRB Agreement"), 
and (ii) that certain Standby Letter of Credit Application and Reimbursement 
and Security Agreement dated December 30, 1991, by and between the Company
and NBD (the "Workmen's Compensation Agreement"), and ( c )  any and all 
other agreements, documents and instruments executed and delivered by the 
Company to any or all of the Banks, the Agent or the Collateral Agent, 
whether in connection with the Credit Agreement, the IRB Agreement, the 
Workmen's Compensation Agreement or otherwise (collectively the "Other 
Agreements"), including, but not limited to, that certain Forbearance 
Agreement dated May 30, 1995 (the "Forbearance Agreement"), as extended from 
time to time, and the other agreements, documents and instruments executed 
and delivered in connection therewith (collectively the "Forbearance 
Documents") [the Other Agreements, together with the Credit Agreement, the 
IRB Agreement and the Workmen's Compensation Agreement are collectively the 
"Champion Loan Documents"); 
   
WHEREAS, the Company has requested, among other things, that the Banks extend
the Termination Date from May 30, 1997, to August 31, 1997; and

WHEREAS, the Banks are willing to extend the Termination Date from May 30, 
1997, to August 31, 1997, but solely on the terms and subject to the 
conditions set forth in this Sixteenth Amendment.
   
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and 
understandings of the parties hereto set forth herein, and other good and 
valuable consideration, the receipt and sufficiency of which consideration 
is hereby acknowledged, the parties hereto hereby agree as set forth in this 
Sixteenth Amendment.
   
1.Terms.
   
All terms which have an initial capital letter in this Sixteenth Amendment 
where not required by the rules of grammar, and are not defined herein, are 
defined in the Credit Agreement.
   
2.Extension of Term of Credit Agreement. /Discretionary Advances.
   
A.  Subject to the conditions precedent contained in Section 4 of this 
Sixteenth Amendment, the Termination Date of the Credit Agreement is hereby 
extended to and including August 31, 1997.
   
B.  The Banks, the Agent and the Collateral Agent shall not be committed to 
make any Advances from and after the date hereof and all Advances requested 
by the Company from and after the date hereof shall be made of or not made at
the sole and absolute discretion of the Banks, the Agent and the Collateral 
Agent notwithstanding (I) any term, provision or condition the contrary 
contained in this Sixteenth Amendment, the "Other Sixteenth Amendment 
Documents" (hereinafter defined), the Champion  Loan Document or otherwise, 
(ii) the nature, amount or timing of such requested Advance, or (iii) the 
extent, priority, condition or status of the collateral securing the 
Liabilities.
   
3.  Trade Creditors. The Company acknowledges that it is currently engaged in
and shall continue to engage in negotiations with various trade creditors of 
the Company (collectively the "Trade Creditors"), for the purpose of, among 
other things, discussing the obligations owed to the Trade Creditors.  The 
Company covenants and agrees to promptly deliver to the Collateral Agent upon
the Collateral Agent's request a report setting forth the progress and status
of the negotiations with the Trade Creditors, such report being certified as 
to accuracy and completeness by the President or the Vice President - Finance
of the Company (the "Trade Creditors Report").  The Trade Creditors Report
shall be in form and substance acceptable to the Bank.  In addition, the 
Company covenants unto the Banks, the Agent and the Collateral Agent to 
deliver to the Agent, immediately upon the Company's receipt or delivery 
thereof, any and all agreements, whether a draft or otherwise, received from 
or forwarded to the Trade Creditors.
   
4.  Conditions Precedent.
   
A. The Banks shall be obligated to extend the Termination Date through 
August 31, 1997, and to enter into this Sixteenth Amendment, subject to the 
full and timely performance of any conditions precedent contained in the 
Champion Loan Documents and this Sixteenth Amendment  and the full and 
timely performance of the following covenants either prior to or 
contemporaneously with the execution and delivery of this Sixteenth 
Amendment.
   
     1. The Company will execute and deliver or cause to be executed and 
     delivered the following documents, all in form and substance acceptable 
     to the Banks, the Agent and the Collateral Agent:
   
   
     (a)  that certain Secretary's Certificate as to Officers and Directors 
     and Directors' Resolutions for the Company;
   
     (b)  that certain Promissory Note of even date herewith executed and 
     delivered by the Company to LaSalle in the principal amount of Three 
     Million Four Hundred Thirteen Thousand Six Hundred Forty-three 
     and 36/100 Dollars ($3,413,643.36);
   
     (c)  that certain Promissory Note of even date herewith executed and 
     delivered by the Company to Harris in the principal amount of One 
     Million One Hundred Eleven Thousand Four Hundred Sixty-two and 56/100 
     Dollars ($1,111,462.56); 
   
     (d)  that certain Promissory Note of even date herewith executed and 
     delivered by the Company to NBD in the principal amount of One Million 
     Four  Hundred Seventy-Four Thousand Eight Hundred Ninety-Four and 08/100 
     Dollars ($1,474,894.08); and
   
     (e)  such other agreements, documents and instruments necessary to 
     effectuate the transactions described herein as the Banks, the Agent 
     and the Collateral Agent may reasonably request.
   
     2.  The Company acknowledges and agrees that the Agent will debit the 
     Company's accounts on the last business day of each and every month, 
     and the Company agrees to pay each of and all of the Banks, the Agent 
     and the Collateral Agent, for all accrued interest, reasonable 
     attorneys' fees, other professional fees, and other fees, costs, 
     charges, obligations and expenses which the Banks, the Agent and/or the 
     Collateral Agent have incurred and will continue to incur in connection 
     with the Champion Loan Documents, this Sixteenth Amendment, any other 
     agreements, documents and instruments executed and delivered in 
     connection with this Sixteenth Amendment (the "Other Sixteenth Amendment
     Documents"), and the indebtedness evidenced by the Champion Loan 
     Documents, this Sixteenth Amendment and/or the Other Sixteenth Amendment
     Documents (collectively the "Champion Indebtedness"). The Agent 
     acknowledges that it will use its best efforts to provide copies of any 
     bills and statements relating thereto at least five (5) business days 
     prior to the last business day of each month, but the failure to deliver 
     copies thereof will not affect the Company's obligation to pay such
     fees, costs, charges, obligations and expenses.
   
     3.   Other than (a) the alleged default described in Section 3 of that 
     certain Fifth Amendment to Amended and Restated Credit Agreement dated 
     as of May 20, 1996, effective as of March 31, 1996, by and among the 
     Company, the Agent, the Collateral Agent and the Banks (the "Fifth 
     Amendment"), (b) those defaults described in Section 3 of that certain 
     Sixth Amendment to Amended and Restated Credit Agreement dated as of 
     August 30, 1996, effective as of July 1, 1996, by and among  the 
     Company, the Agent, the Collateral Agent and the Banks (the "Sixth 
     Amendment"), ( c ) those defaults described in Section 9.A. of this 
     Sixteenth Amendment, and (d) those defaults described in those certain 
     letters dated August 3, 1995 and May 31, 1996, from the Banks to the
     Company (collectively the "Default Letter"), no breach, default or event
     of default has occurred pursuant to the Champion Loan Documents, this 
     Sixteenth Amendment or the Other Sixteenth Amendment Documents.
   
     4.  The representations and warranties contained in the Champion Loan 
     Documents, this Sixteenth Amendment and the Other Sixteenth Amendment 
     Documents shall be true and correct.
   
     5.  The Company has not spent or withdrawn all or any portion of the 
     "Life Insurance Proceeds" (as defined in the Fifth Amendment) on deposit
     in the LaSalle Account, except in accordance with the Fifth Amendment.
                                      
     B.  Without limiting the discretionary nature of the advances as 
     provided in Paragraph 2 B hereof, the Banks, the Agent and the 
     Collateral Agent will not make any advances unless the following 
     conditions exist or occur prior to each request of the Company for an 
     advance:
   
     1.  The Company will execute and deliver or cause to be executed and 
     delivered such agreements, documents and instruments necessary to 
     effectuate the transactions described herein as the Banks, the Agent 
     and the Collateral Agent may reasonably request, all in form and 
     substance acceptable to the Banks, the Agent and the Collateral Agent.
   
     2.  The Company acknowledges and agrees that the Agent will debit the 
     Company's accounts on the last business day of each and every month, and
     the Company agrees to pay each of and all of the Banks, the Agent and 
     the Collateral Agent, for all accrued interest, reasonable attorneys' 
     fees, other professional fees, and other fees, costs, charges, 
     obligations and expenses which the Banks, the Agent and/or the 
     Collateral Agent have incurred and will continue to incur in connection 
     with the Champion Loan Documents, this Sixteenth Amendment, the Other 
     Sixteenth Amendment Documents and the Champion  Indebtedness. The Agent 
     acknowledges that it will use its best efforts to provide copies of any 
     bills and statements relating thereto at least five (5) business days 
     prior to the last business day of each month, but the failure to deliver
     copies thereof will not affect the Company's obligation to pay such 
     fees, costs, charges, obligations and expenses.
   
     3.  Other than (a) the alleged default described in Section 3 of the 
     Fifth Amendment, (b) those defaults described in Section 3 of the Sixth 
     Amendment, ( c )  those defaults described in Section 9.A. of this 
     Sixteenth Amendment, and (d) those defaults described in the Default 
     Letter, no breach, default or event of default has occurred pursuant to 
     the Champion Loan Documents, this Sixteenth Amendment or the Other 
     Sixteenth Amendment Documents.
   
     4.  The representations and warranties contained in the Champion Loan 
     Documents, this Sixteenth Amendment and the Other Sixteenth Amendment 
     Documents shall be true and correct.
   
     5.  The Company will not spend or withdraw all or any portion of the 
     Life Insurance Proceeds on deposit in the LaSalle Account, except in 
     accordance with the Fifth Amendment.
   
5.  Revolving Commitment.  The amount of each Bank's Commitment and each 
Bank's Percentage Share is set forth on the signature pages hereto.  
Notwithstanding the discretionary nature of the advances to be made 
pursuant 2 B hereunder, the Total Revolving Commitment of all of the Banks 
from the date hereof through and including August 31, 1997, is Six Million  
and  no/100 Dollars ($6,000,000.00).  
      
6.  Additional Covenants.  The Company covenants unto the Banks, the Agent 
and the Collateral Agent as follows:
   
    A.  The Company shall fully and timely pay the Champion Indebtedness as 
    evidenced by the Champion Loan Documents, this Sixteenth Amendment and 
    the Other Sixteenth Amendment Documents, and fully and timely perform, 
    subject to the applicable cure period, if any, all of the covenants, 
    duties, obligations and agreements contained in the Champion Loan 
    Documents, this Sixteenth Amendment and the Other Sixteenth Amendment 
    Documents.
   
    B.  The Company will prepare and deliver each and every business day to 
    the Banks, the Agent and the Collateral Agent a borrowing base 
    certificate, in form and substance acceptable to the Banks, the Agent 
    and the Collateral Agent; provided, however, if the Company fails to 
    deliver a borrowing base certificate on a business day when it has not 
    requested nor received an Advance, such failure shall constitute an 
    Event of Default if such borrowing base certificate has not been 
    delivered within two (2) days after notice from the Agent.
   
    C.  The Company covenants that a petition under the United States 
    Bankruptcy Code or any similar federal, state or local law, statute or 
    regulation has not been filed by or  against the Company. 
   
7.  Default.
   
    The Company shall be in default under the terms and provisions of this 
    Sixteenth Amendment upon the occurrence of any of the following events 
    (an "Event of Default"):
   
    A.  The Company fails to fully and timely pay all sums due pursuant to 
    the Champion Loan Documents, this Sixteenth Amendment or the Other 
    Sixteenth Amendment Documents;
   
    B.  Other  than (1) the alleged default described in Section 3  of the 
    Fifth Amendment, (2) those defaults described in Section 3 of the Sixth 
    Amendment, (3) those defaults described in Section 9.A. of this Sixteenth 
    Amendment, and (4) those defaults described in the Default Letter, the 
    Company breaches any covenant, agreement or obligation set forth in the 
    Champion Loan Documents, this Sixteenth Amendment or the Other Sixteenth 
    Amendment Documents, which remains uncured after the expiration of the
    applicable cure period, if any; or
     
    C.  Other than (1) the alleged default described in Section 3 of the 
    Fifth Amendment, (2) those defaults described in Section 3 of the 
    Sixth Amendment, (3) those defaults described in  Section 9.A. of this 
    Sixteenth Amendment, and (4) those  defaults described in the Default 
    Letter, any other or further breach, default or event of default occurs 
    under the Champion Loan Documents, which remains uncured after the 
    expiration of the applicable cure period, if any.
   
    In addition, the Company covenants and agrees that an Event of Default 
    under this Sixteenth Amendment is and shall constitute an Event of 
    Default under the Champion Loan Documents and the Other Sixteenth 
    Amendment Documents.  Upon an Event of Default, all of the Champion 
    Indebtedness shall be immediately due and payable, and shall be paid by 
    the Company to the Banks, the Agent and the Collateral Agent, as the 
    case may be, without any further notice or demand whatsoever, and the
    Banks, the Agent and the Collateral Agent, as the case may be, may, 
    without notice, immediately (i) exercise all of their rights and remedies
    under the Champion Loan Documents, including, but not limited to, the 
    Forbearance Documents, this Sixteenth Amendment and the Other Sixteenth
    Amendment Documents, as well as any and all other rights and remedies 
    available at law, in equity or otherwise, and (ii) take any action, 
    legal or equitable, to collect the Champion Indebtedness and any and all 
    other sums now or hereafter due and owing from the Company to the Banks, 
    the Agent and the Collateral Agent.  The Company acknowledges and agrees 
    that the Banks, the Agent and the Collateral Agent have made no 
    assurances, have not committed and are under no obligation to extend the
    Termination Date.
   
    8.  Reaffirmation
   
    The Company hereby reaffirms to the Banks, the Agent and the Collateral 
    Agent its pledge and grant of the security interests, liens, mortgages, 
    other encumbrances and interests described in the Champion Loan 
    Documents.  The Company and the Banks hereby affirm the continued 
    validity of the Champion Loan Documents, including, but not limited to, 
    the Forbearance Documents, and acknowledge that all of the terms and 
    provisions of the Champion Loan Documents, including, but not limited 
    to, the Forbearance Documents, are and remain in full force and effect, 
    are enforceable in accordance with their terms and the Banks, the Agent 
    and the Collateral Agent are not in breach or default of any of the
    terms, conditions and provisions of the Champion Loan Documents, 
    including, but not limited to, the Forbearance Documents.
   
    9.  Reservation of Rights.  
   
    A.  The Company acknowledges and agrees that it is and will continue 
    from time to time to be in default under the terms and provisions of the 
    Champion Loan Documents pursuant to Sections 6.1(a), 6.1(b), 6.2 (b), 
    6.2(f), 6.13, 6.14, 6.15, 6.29, 9.1(a) and 9.1 (n) of the Credit 
    Agreement, Article V of the IRB Agreement and Section 5(h) of the 
    Workmen's Compensation Agreement, the Event of Default described in 
    Section 3 of the Sixth Amendment and the alleged default described in 
    Section 3 of the Fifth Amendment (collectively the "Continuing Covenant 
    Defaults").  In addition, reference is hereby made to the Default Letter 
    which describes other possible defaults of the Company.  To the best of 
    the Company's knowledge after due and  diligent inquiry, the Company 
    represents and warrants unto the Banks, the Agent and the Collateral 
    Agent that no other breach, default or event of default exists under the 
    terms and provisions of the Champion Loan Documents.  To the Banks', the 
    Agent's and the Collateral Agent's knowledge, without any inquiry or 
    investigation of any kind whatsoever, the Banks, the Agent and the 
    collateral Agent are not aware of any other breach, default or event of 
    default under the terms and provisions of the Champion Loan Documents.
   
    B.  The Banks, the Agent and the Collateral Agent hereby continue to 
    reserve all of their rights and remedies in connection with the 
    Continuing Covenant Defaults and the defaults described in the Default 
    Letter, whether such rights and remedies are pursuant to the Champion 
    Loan Documents, including, but not limited to, the Forbearance Documents,
    this Sixteenth Amendment, the Other Sixteenth Amendment  Documents, at 
    law, in equity or otherwise; provided, however, the Continuing Covenant 
    Defaults shall be deemed conditionally waived and the defaults described 
    in the Default Letter shall be conditionally waived only as expressly 
    provided in the Default Letter, all such defaults subject to 
    reinstatement and enforcement upon the occurrence of an Event of Default 
    under this Sixteenth Amendment or the Other Sixteenth Amendment Documents
    or upon an additional or other default or event of  default under the 
    Champion Loan Documents.  Upon the occurrence of an Event of Default 
    under this Sixteenth Amendment or the Other Sixteenth Amendment Documents
    or upon an additional or other default or event of default under the 
    Champion Loan Documents, then the Continuing Covenant Defaults shall be 
    deemed reinstated and existing, without further act or deed, as if no 
    conditional waiver were granted and any and all rights of the Banks, the 
    Agent or the Collateral Agent with respect thereto shall remain reserved,
    unimpaired and fully enforceable.
   
    C.  Nothing contained in this Sixteenth Amendment or the Other Sixteenth 
    Amendment Documents shall be or be deemed to be an unconditional waiver 
    by the Banks, the Agent and the Collateral Agent of any default, breach 
    or event of default, whether now existing or hereafter arising or 
    occurring.  The Company expressly acknowledges and agrees that, upon an 
    Event of Default, the Banks, the Agent and the Collateral Agent may 
    exercise any of their rights and remedies pursuant to the Champion Loan 
    Documents, including, but not limited to, the Forbearance Documents, this
    Sixteenth Amendment or the Other Sixteenth Amendment Documents, at law, 
    in equity or otherwise. Nothing contained in this Sixteenth Amendment or 
    the Other Sixteenth Amendment Documents shall affect the Company's 
    obligation to fully and timely pay the Champion Indebtedness.
          
    10.  Waiver and Release  In consideration of the Banks', the Agent's and 
    the Collateral Agent's execution and delivery of this Sixteenth 
    Amendment, the Company hereby waives, releases and forever discharges 
    the Banks, the Agent and the Collateral Agent, their predecessors, 
    parents, subsidiaries, affiliates, agents, employees, officers, 
    directors, shareholders, attorneys, legal representatives, successors 
    and assigns, and each of them, of and from any and all claims, demands,
    counterclaims, set-offs, defenses, debts, liabilities, obligations, 
    costs, expenses, actions, causes of action and damages of every kind, 
    nature and description whatsoever, known or unknown, foreseeable and 
    unforeseeable, liquidated and unliquidated, insured and uninsured, which 
    the Company heretofore and/or presently owns, holds or has by reason of 
    any matter, cause or thing whatsoever, arising from, relating to or in 
    connection with the Champion Loan Documents, this Sixteenth Amendment, 
    the Other Sixteenth Amendment Documents, the Champion Indebtedness or 
    the default by the Company. The Company hereby acknowledges and agrees 
    that the foregoing release shall not be or be deemed to create, construe 
    or admit any liability on behalf of the Banks, the Agent and the 
    Collateral Agent.
   
11.  Consultant.  Pursuant to the terms and provisions of the Champion Loan 
Documents, the Company shall fully cooperate with the management consulting 
firm of Glass & Associates, Inc., or such other consulting firm or firms 
designated by the Banks (individually, the "Consultant"), to the extent 
requested by the Banks or such consulting firms. Such cooperation, shall 
include, without limitation, the Company providing the Consultant with (i) 
unlimited access to the Company's assets and books and records., whether 
during normal business hours or otherwise, as well as use of photocopy and 
other office facilities, and (ii) reasonable access to the Company's offices 
and employees for the purpose of discussing the Company's assets and books 
and records. The Company shall reimburse the Banks, the Agent and the 
Collateral Agent for all reasonable costs, fees and expenses incurred by the 
Banks, the Agent and Collateral Agent in connection with the Consultant. 
   
12.  Authority To Execute This Sixteenth Amendment. The Company represents
and warrants to the Banks, the Agent and the Collateral Agent that (a) it has
obtained all necessary consents to enter into, execute, deliver and perform 
this Sixteenth Amendment and the Other Sixteenth Amendment Documents, 
including, but not limited to, resolutions of the Board of Directors of the
Company, (b) the Company has the right, power and capacity and is duly 
authorized and empowered to enter into, execute, deliver and perform this 
Sixteenth Amendment and the Other Sixteenth Amendment Documents, and ( c ) 
the execution and delivery of this Sixteenth Amendment and the Other 
Sixteenth Amendment Documents shall not breach any agreement, instrument or 
document to which the Company is a party or by which it is bound.
   
13.  Construction. This Sixteenth Amendment shall be interpreted, construed
and governed by and under the laws of the State of Illinois.
   
     A.  Wherever possible, each provision of this Sixteenth Amendment shall 
be interpreted in such manner as to be valid and enforceable under applicable
law, but if any provision of this Sixteenth  Amendment is held to be invalid 
or unenforceable by a court of competent jurisdiction, such provision shall 
be severed here from and such invalidity or unenforceability shall not affect
any other provision of this Sixteenth Amendment, the balance of which shall 
remain in and have its intended full force and effect; provided, however, if 
such provision may be modified so as to be valid and enforceable as a matter 
of law, such provision shall be deemed to be modified so as to be valid and 
enforceable to the maximum extent permitted by law.
   
     B.  The Paragraph headings contained in this Sixteenth Amendment are 
solely for the purpose of reference, are not part of the agreement among the 
Company, the Banks, the Agent and the Collateral Agent and shall not in any 
way affect the meaning or interpretation of this Sixteenth Amendment, or any 
Paragraph or provision hereof.
   
     C.  This Sixteenth Amendment shall be binding on the Company and its 
successors, and shall inure to the benefit of the Banks, the Agent and the 
Collateral Agent, their respective successors, assigns, affiliates, divisions
and parent.
   
     D.  This Sixteenth Amendment cannot be assigned by the Company without 
the Banks', the Agent's and the Collateral Agent's prior written consent; 
provided, however, the Banks, the Agent and the Collateral Agent may assign 
the Champion Loan Documents, this Sixteenth Amendment and the Other Sixteenth
Amendment Documents without notice to or the consent of the Company.
   
     E.  No failure to exercise, and no delay in exercising, any of the 
Banks', the Agent's and the Collateral Agent's rights, powers or privileges 
shall operate as a waiver thereof.
   
     1.  No waiver of any breach of any provision shall be deemed to be a 
waiver of any preceding or succeeding breach of the same or any other 
provision.
   
     2.  No extension of time for the payment of any of the Champion 
Indebtedness or any other sum to be paid pursuant to the Champion Loan 
Documents, this Sixteenth Amendment or the Other Sixteenth Amendment 
Documents, or the performance of any other obligation or act, shall be 
deemed to be an extension of the time for payment or performance of any 
other obligation or act.
   
     3.  This Sixteenth Amendment may not be altered, changed, amended or 
modified, except in accordance with Section 11.1 of the Credit Agreement.  
   
     F.  This Sixteenth Amendment, together with the Other Sixteenth 
Amendment Documents, constitutes the entire agreement among the Company, the 
Banks, the Agent and the Collateral Agent with regard to the subject matter 
hereof.
   
     G.  If, and to the extent the terms and provisions of this Sixteenth 
Amendment contradict, modify, supersede or conflict with the terms and 
provisions of the Champion Loan Documents, including, but not limited to, the
Forbearance Documents, then the terms and provisions of this Sixteenth 
Amendment shall govern and control; provided, however, to the extent the 
terms and provisions of this Sixteenth Amendment do not contradict, modify, 
supersede or conflict with the terms and provisions of the Champion Loan 
Documents, including, but not limited to, the Forbearance Documents, then 
the Champion Loan Documents, including, but not limited to, the Forbearance 
Documents, shall remain in and have their intended full force and effect, 
and the Company, the Banks, the Agent and the Collateral Agent hereby affirm,
confirm and ratify the same.
   
IN WITNESS  WHEREOF, the parties have caused this Sixteenth Amendment to be 
executed and delivered by their duly authorized officers as of the date first 
set forth above.
   
   CHAMPION PARTS, INC., an Illinois corporation 
         
                                             By:___________________________
                                             Title:_________________________
   
Amount of LaSalle's              Percentage    LA SALLE NATIONAL BANK,
individually Revolving           Share 
Commitment as Agent and 
as Collateral Agent
          
As of May 30, 1997,              56.894056%     By:__________________________
through and including                           Title:_______________________
   
August 31, 1997,               $3,413,643.36

   
Amount of NBD's                  Percentage     NBD BANK Revolving Commitment 
                                 Share
   
As of May 30, 1997,              24.581568%     By:__________________________
through and including                           Title:_______________________
   
August 31, 1997,                $1,474,894.08
   

Amount of Harris'                 Percentage     HARRIS TRUST AND SAVINGS 
Revolving Commitment              Share          BANK
As of May 30, 1997,
through and including            18.524376%      By: ________________________ 
                                                 Title:______________________
   
August 31, 1997,                $1,111,462.56
   
TOTAL REVOLVING COMMITMENT                                                   
   
As of May 30, 1997,through 
and including August 31, 1997,  $6,000,000.00
   
   
Doc ID: 41601-1 

                             EXHIBIT "A"
                           WAIVER LETTERS
   
    
Attached.         


                             EXHIBIT "B"
                         UPDATED SCHEDULES
                              
Attached.
   
   
   
Doc ID: 18704-5