<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   FORM 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934.
                 For the quarterly period ended:  July 2, 1999

                                      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 number 0-28568

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
                     ------------------------------------
            (Exact name of registrant as specified in its charter)


     California                                                     95-2920557
--------------------                                           ---------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

                   700 East Bonita Avenue, Pomona, CA 91767
              (Address of principal executive offices) (Zip Code)

                                (909) 624-8041
              (Registrant's telephone number including area code)

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 [_]

The number of shares outstanding of the registrant's Common Stock, no par value,
at July 2, 1999 was 16,525,000 shares.

This Form 10-Q contains 14 pages.
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                                     INDEX
                                     -----

<TABLE>
<CAPTION>
PART I.           FINANCIAL INFORMATION                                                                Page Number
<S>      <C>                                                                                           <C>
Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets                                                               3

                  July 2, 1999 (unaudited) and March 26, 1999


         Condensed Consolidated Statements of Income                                                         4

                  Fourteen weeks ended July 2, 1999 (unaudited) and thirteen weeks
                  ended June 26, 1998 (unaudited)


         Condensed Consolidated Statements of Cash Flows                                                     5

                  Fourteen weeks ended July 2, 1999 (unaudited) and thirteen weeks
                  ended June 26, 1998 (unaudited)


         Notes to Condensed Consolidated Financial Statements (unaudited)                                    6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations               8

Item 3.  Quantitative and Qualitative Disclosure About Market Risks                                         11


PART II           OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                  12

Item 2.  Changes in Securities                                                                              12

Item 3.  Defaults upon Senior Securities                                                                    12

Item 4.  Submission of Matters to a Vote of Security Holders                                                12

Item 5.  Other Information                                                                                  12

Item 6.  Exhibits and Reports on Form 8-K                                                                   13

Signatures                                                                                                  14
</TABLE>
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements
          --------------------
                      Keystone Automotive Industries, Inc.
                     Condensed Consolidated Balance Sheets
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                              July 2, 1999        March 26, 1999
                                                                                              (Unaudited)             (Note)
                                                                                          ----------------       -----------------
                                   ASSETS
<S>                                                                                          <C>              <C>
Current Assets:
     Cash and cash equivalents                                                                 $ 6,889               $ 17,784
     Accounts receivable, net of allowance of $1,017 at July 1999 and $962
     at March 1999                                                                              30,467                 30,256
     Inventories, primarily finished goods                                                      76,531                 72,284
     Other current assets                                                                        9,615                 11,557
                                                                                          ----------------       -----------------
         Total current assets                                                                  123,502                131,881

Plant, property and equipment, net                                                              21,513                 19,367
Goodwill, net of accumulated amortization of $1,998 at July 1999 and $1,583 at March 1999       37,157                 36,262
Other intangibles, net of accumulated amortization of $2,420 at July 1999 and $2,167 at          2,511                  1,874
 March 1999
Other assets                                                                                     4,826                  4,710
                                                                                          ----------------       -----------------
   Total Assets                                                                               $189,509               $194,094
                                                                                          ================       =================
                    LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
     Bankers acceptances                                                                      $     --               $  2,961
     Accounts payable                                                                           14,262                 14,859
     Accrued liabilities                                                                         7,302                  8,531
     Current portion of long-term debt                                                             200                    200
                                                                                          ----------------       -----------------
         Total current liabilities                                                              21,764                 26,551

     Long-term debt, less current portion                                                           50                    100
     Other long-term liabilities                                                                 2,905                  2,679
     Deferred taxes                                                                              1,559                  1,559

Shareholders' Equity:
     Preferred stock, no par value:
         Authorized shares--3,000,000
         None issued and outstanding                                                                --                     --
     Common stock, no par value:
         Authorized shares--50,000,000
         Issued and outstanding shares 16,525,000 at July 1999 and 16,858,000 at March 1999     99,967                105,436
     Additional paid-in capital                                                                  1,223                  1,223
     Retained earnings                                                                          62,568                 57,073
     Accumulated other comprehensive loss                                                         <527>                  <527>
                                                                                          ----------------       -----------------
         Total shareholders' equity                                                            163,231                163,205
                                                                                          ----------------       -----------------
         Total liabilities and shareholders' equity                                           $189,509               $194,094
                                                                                          ================       =================
</TABLE>


  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

NOTE:  The balance sheet at March 26, 1999 has been derived from the audited
   consolidated financial statements at that date but does not include all of
   the information and footnotes required by generally accepted accounting
   principles for complete financial statements.

                                       3
<PAGE>

                     Keystone Automotive Industries, Inc.
                  Condensed Consolidated Statements of Income
                     (In thousands, except share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Fourteen               Thirteen
                                                                                           Weeks Ended            Weeks Ended
                                                                                          July 2, 1999           June 26, 1998
                                                                                      -----------------------------------------

           <S>                                                                       <C>                    <C>
            Net sales                                                                       $   101,381             $    69,872
            Cost of sales                                                                        56,475                  39,534
                                                                                      -----------------      ------------------
            Gross profit                                                                         44,906                  30,338

            Operating expenses:
                Selling and distribution expenses                                                28,574                  19,548
                General and administrative                                                        7,657                   4,786
                                                                                      -----------------      ------------------
            Operating income                                                                      8,675                   6,004
            Other income                                                                            686                     440
            Interest (expense)                                                                      (48)                    (11)
                                                                                      -----------------      ------------------
            Income before income taxes                                                            9,313                   6,433
            Income taxes                                                                          3,818                   2,573
                                                                                      -----------------      ------------------
            Net income                                                                      $     5,495             $     3,860
                                                                                      =================      ==================

            Earnings per share:
                Basic                                                                       $      0.33             $      0.26
                                                                                      =================      ==================
                Diluted                                                                     $      0.33             $      0.26
                                                                                      =================      ==================

            Weighted average shares outstanding
                Basic                                                                        16,728,000              14,655,000
                                                                                      =================      ==================
                Diluted                                                                      16,818,000              14,917,000
                                                                                      =================      ==================
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       4
<PAGE>

                      Keystone Automotive Industries, Inc.
                Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                       Fourteen             Thirteen
                                                                                     Weeks Ended           Weeks Ended
                                                                                     July 2, 1999         June 26, 1998
                                                                                 --------------------------------------
<S>                                                                                  <C>                   <C>
Operating activities
Net income                                                                               $  5,495               $ 3,860
Adjustments to reconcile net income to net cash used in operating
 activities:
Depreciation and amortization                                                               1,831                 1,096
Provision for losses on uncollectible accounts                                                 33                    73
Provision for losses on inventory                                                              90                    --
Loss/(gain) on sale of assets                                                                  20                   (31)
Changes in operating assets and liabilities:
     Accounts receivable                                                                      809                   825
     Inventories                                                                           (2,909)               (2,557)
     Other assets                                                                           1,459                 1,079
     Accounts payable                                                                        (597)                  572
     Accrued liabilities                                                                   (1,003)                2,448
                                                                                 ----------------      ----------------
Net cash provided by operating activities                                                   5,228                 7,365

Investing activities
Proceeds from sale of assets                                                                   24                    43
Purchases of property, plant and equipment                                                 (2,007)               (1,177)
Cash paid for acquisitions                                                                 (5,660)                   --
                                                                                 ----------------      ----------------
Net cash used in investing activities                                                      (7,643)               (1,134)

Financing activities
Bankers acceptances and other short-term debt, net                                         (2,961)                   22
Principal payments on long-term debt                                                          (50)                 (175)
Repurchases of common stock                                                                (5,543)                   --
Net proceeds on option exercise                                                                74                   391
                                                                                 ----------------      ----------------
Net cash (used in) provided by financing activities                                        (8,480)                  238
                                                                                 ----------------      ----------------

Net (decrease) increase in cash and cash equivalents                                      (10,895)                6,469

Cash and cash equivalents at beginning of period                                           17,784                10,859
                                                                                 ----------------      ----------------
Cash and cash equivalents at end of period                                               $  6,889               $17,328
                                                                                 ================      ================

Supplemental disclosures
     Interest paid during the period                                                     $     47               $    14
     Income taxes paid during the period                                                 $    369               $ 1,410
                                                                                 ================      ================
</TABLE>


  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.



                                       5
<PAGE>

                     Keystone Automotive Industries, Inc.

             Notes to Condensed Consolidated Financial Statements
             ----------------------------------------------------
                                  (Unaudited)
                                 July 2, 1999


1.   Basis of Presentation

     The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of Form 10-Q and Article 10 of Regulation
S-X.  Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.  In the opinion of management, all adjustments, consisting only of
normal recurring accruals, considered necessary for fair presentation, with
respect to the interim financial statements have been included.  The results of
operations for the 14 week period ended July 2, 1999 are not necessarily
indicative of the results that may be expected for the full year ending March
31, 2000.  For further information, refer to the financial statements and
footnotes thereto for the year ended March 26, 1999, included in the Keystone
Automotive Industries, Inc. Form 10-K filed with the Securities and Exchange
Commission on June 24, 1999.


2.   Fiscal Year

     The Company uses a 52/53 week fiscal year.  The Company's fiscal year ends
on the last Friday of March.  The quarters ended July 2, 1999 and June 26, 1998
included fourteen and thirteen week periods, respectively.


3.   Income Taxes

     The income tax provision for interim periods is based on an estimated
effective annual income tax rate.


4.   New Accounting Standards

     In March 1998, Statement of Position (SOP) 98-1, "Accounting for the Costs
of Computer Software Developed for or Obtained for Internal Use," was issued,
which is effective for fiscal years beginning after December 15, 1998. SOP 98-1
requires capitalization and amortization of qualified computer software costs
over its estimated useful life. The Company adopted SOP 98-1 effective March 27,
1999. There has been no significant impact on the current condensed consolidated
financial statements due to the adoption of SOP 98-1.


5.   Acquisitions

     On June 27, 1998, the Company completed its acquisition of Republic
Automotive Parts, Inc. ("Republic").  The Company issued approximately 2,907,000
shares of its common stock in exchange for the outstanding common stock of
Republic (total purchase price of approximately $63.1 million using an average
share price of $21.69).  The fair value of the assets acquired approximated
$41.9 million, net of approximately $28.8 million of liabilities assumed.  The
excess of the purchase price over assets acquired (goodwill) approximated $21.2
million and is being amortized over 30 years.  The acquisition of Republic is
being accounted for under the purchase method of accounting.

     In addition, during fiscal 1999, subsequent to the Republic acquisition,
Keystone acquired six other companies for approximately $17.8 million cash, $1.8
million in stock and a note payable of $150,000.  These acquisitions were
accounted for as purchases, and accordingly the assets and liabilities of the
acquired entities have been recorded at their estimated fair values at the dates
of acquisition.  The excess of purchase price over the estimated fair values of
the assets acquired was approximately $9.9 million and has been recorded as
goodwill and is being amortized over 15 to 20 years.  The results of operations
of the Company include the results of the acquired companies from the date of
acquisition.

                                       6
<PAGE>

     During the 14 week period ended July 2, 1999, Keystone acquired two
companies for approximately $5.7 million in cash.  These acquisitions were
accounted for as purchases, and accordingly the assets and liabilities of the
acquired entities have been recorded at their estimated fair values at the dates
of acquisition.  The excess of purchase price over the estimated fair values of
the assets acquired was approximately $942,000 and has been recorded as goodwill
and is being amortized over 15 years.  The unaudited pro forma results for
fiscal 1999 and 2000, assuming these two acquisitions had been made at the
beginning of fiscal 1999 or 2000, would not be materially different from the
results presented above.


6.   Shareholders Equity

     In September 1998, the Board of Directors authorized the Company to
purchase up to 1,000,000 shares of its common stock at such times and at such
prices as the President and Chief Financial Officer deemed appropriate.
Repurchased shares are retired and treated as authorized but unissued shares. At
March 26, 1999, the Company had repurchased approximately 1,009,000 shares of
its common stock at an average cost of $18.67 per share.

    In March 1999, the Board of Directors authorized the Company to purchase an
additional 1,000,000 shares of its common stock and in August 1999, the Board of
Directors authorized the Company to purchase an additional 500,000 shares of its
common stock.  Repurchased shares are retired and treated as authorized but
unissued shares.  At August 10, 1999, the Company had cumulatively repurchased
approximately 1,845,000 shares of its common stock at an average cost of $17.86
per share.

                                       7
<PAGE>

                       KEYSTONE AUTOMOTIVE INDUSTRIES, INC.




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

     Except for the historical information contained herein, certain matters
addressed in this Item 2 constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended.  Such forward-looking
statements are subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those anticipated by the Company's
management.  The Private Securities Litigation Reform Act of 1995 (the "Act")
provides certain "safe harbor" provisions for forward-looking statements.  All
forward-looking statements made in this Quarterly Report on Form 10-Q are made
pursuant to the Act and are subject to the cautionary statement set forth
herein.

General
-------

     The results of operations for the quarter ended July 2, 1999 (the "1999
Quarter") reflect a 14 week period whereas the comparable quarter in the prior
fiscal year (the "1998 Quarter") reflects a 13 week period.  Consequently,
comparisons of these results may not be meaningful.

     In addition, the results of operations for the 1999 Quarter include the
results with respect to the nine acquisitions completed subsequent to the 1998
Quarter accounted for as "purchases," whereas the 1998 Quarter would not include
any results of operations for those acquired entities.  Such acquisitions
include the acquisition of Republic completed on June 27, 1998, the acquisition
of the Midwest Bumper group of companies effective for financial statement
purposes on January 4, 1999 and the acquisition of the Nordan Products group of
companies effective May 10, 1999.

                                       8
<PAGE>

                      KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

Results of Operations
---------------------

     The following table sets forth for the periods indicated, certain selected
income statement items as a percentage of net sales.

<TABLE>
<CAPTION>
                                                      Fourteen         Thirteen
                                                    Weeks Ended       Weeks Ended
                                                    July 2, 1999     June 26, 1998
                                                  --------------------------------
<S>                                               <C>                <C>
Net sales                                                 100.0%           100.0%
Cost of sales                                              55.7             56.6
                                                          -----            -----
Gross profit                                               44.3             43.4
Selling and distribution expenses                          28.2             28.0
General and administrative expenses                         7.6              6.8
Other income                                                0.7              0.6
Interest (expense)                                         (0.0)            (0.0)
                                                          -----            -----
Income before income taxes                                  9.2              9.2
Income taxes                                                3.8              3.7
                                                          -----            -----
Net income                                                  5.4%             5.5%
                                                          =====            =====
</TABLE>

Fourteen weeks ended July 2, 1999 compared to thirteen weeks ended June 26,
---------------------------------------------------------------------------
1998.
-----

     Net sales were $101.4 million for the quarter ended July 2, 1999 (the "1999
Quarter") compared to $69.9 million for the quarter ended June 26, 1998 (the
"1998 Quarter"), an increase of $31.5 million or 45.1%.  This increase was due
in part to the 14 week period in the 1999 Quarter as compared to 13 weeks in the
1998 Quarter as well as to an increase of $16.5 million in sales of automotive
body parts (including fenders, hoods, headlights, radiators, grilles and other
crash parts), an increase of $10.6 million in sales of new and recycled bumpers
and an increase of $3.2 million in sales of paint and related materials, which
increases represent increases of approximately 58%, 48% and 26%, respectively,
over the 1998 Quarter. These increases were attributable primarily to an
increase in the number of service centers in operation due to acquisitions and
an increase in unit volume and price increases in certain parts of the country.
In addition, the Company sold approximately $5.7 million of remanufactured alloy
wheels in the 1999 Quarter compared to $3.8 in the prior year period, an
increase of 50%.

     Gross profit increased in the 1999 Quarter to $44.9 million (44.3% of net
sales) from $30.3 million (43.4% of net sales) in the 1998 Quarter, an increase
of 48%, primarily as a result of the increase in net sales.  The Company's
increase in gross profits as a percentage of net sales in the 1999 Quarter
reflects the continued fluctuation in cost of sales, generally because of
factors such as lower product costs, product mix and competition.

     Selling and distribution expenses increased to $28.6 million (28.2% of net
sales) in the 1999 Quarter from $19.5 million  (28.0% of net sales) in the 1998
Quarter, an increase of 46.2%.  The increase in these expenses as a percentage
of net sales was generally the result of acquisitions.

     General and administrative expenses increased to $7.7 million (7.6% of net
sales) in the 1999 Quarter from $4.8 million (6.8% of net sales) in the 1998
Quarter, an increase of 60%.   The increase in these expenses as a percentage of
net sales was generally the result of acquisitions, including, but not limited
to, an increase in the amounts of amortization of goodwill and covenants not to
compete.

                                       9
<PAGE>

Variability of Quarterly Results and Seasonality

  The Company has experienced, and expects to continue to experience, variations
in its sales and profitability from quarter to quarter due, in part, to the
timing and integration of acquisitions and the seasonal nature of Keystone's
business. The number of collision repairs is directly impacted by the weather.
Accordingly, the Company's sales generally are highest during the five-month
period from December to April. The impact of seasonality may be reduced somewhat
in the future as Keystone continues to become more geographically diversified.
Other factors which influence quarterly variations include the reduced number of
business days during the holiday seasons, the timing of the introduction of new
products, the level of consumer acceptance of new products, general economic
conditions that affect consumer spending, the timing of supplier price changes
and the timing of expenditures in anticipation of increased sales and customer
delivery requirements.


Liquidity and Capital Resources

  The Company's primary need for funds has been to finance the growth of
inventory and accounts receivable and acquisitions. At July 2, 1999, working
capital was $101.7 million compared to $105.3 million at March 26, 1999.
Historically, the Company has financed its working capital requirements from its
cash flow from operations, proceeds from public offerings of its Common Stock
and advances drawn under lines of credit.

  The Company has in place a revolving line of credit with its commercial lender
that provides for a $25 million unsecured credit facility that expires in
September 1999.  Advances under the revolving line of credit bear interest at
LIBOR plus 0.75%. At August 1, 1999, $1.0 million had been drawn down under the
line of credit.  The line of credit is subject to certain restrictive covenants
set forth in a loan agreement, which requires that the Company maintain certain
financial ratios. The Company was in compliance with all covenants as of July 2,
1999 and as of the date of the filing of this Quarterly Report.

  During fiscal 1999, the Company initiated a stock repurchase program, pursuant
to which it repurchased approximately 1.0 million shares of its Common Stock for
approximately $18.8 million, or an average of $18.67 per share.  In March 1999,
the Board of Directors authorized the repurchase of an additional 1,000,000
shares and in August 1999 an additional 500,000 shares, bringing to 2,500,000
the total share repurchase program.   During the quarter ended July 2, 1999, the
Company repurchased 342,000 shares for $5.5 million, or an average of $16.21 per
share.  From the beginning of the stock repurchase program through August 10,
1999, the Company had repurchased an aggregate of 1,845,000 shares for $33.0
million, or an average of $17.86 per share.

  During the 1999 Quarter, the Company's cash and cash equivalents decreased by
$10.9 million. This decrease is the result of an increase in cash provided by
operating activities of $5.2 million from a variety of sources, primarily net
income, which was more than offset by decreases in (i) cash used in investing
activities of $7.6 million, primarily related to the consummation of
acquisitions for cash and the purchase of property, plant and equipment, and
(ii) cash used in financing activities of $8.5 million, primarily as a result of
the repurchase of shares of the Company's Common Stock and the paydown of
bankers acceptances.

  While the Company believes that consolidation among independent distributors
of aftermarket collision parts continues to create opportunities for the Company
to acquire service centers in new and existing markets, the Company anticipates
that the aggregate revenues of business which may be acquired during the current
fiscal year will be less than during each of the last two fiscal years. The
Company intends to continue exploring acquisition opportunities that may arise
from time to time. To date, the Company's acquisitions have been financed
primarily by issuing shares of its Common Stock or paying cash obtained from (i)
operations, (ii) proceeds from public offerings of its Common Stock or (iii)
advances drawn under its credit facilities. In the future, the Company may incur
indebtedness or issue equity or debt securities to third parties or the sellers
of the acquired businesses to complete additional acquisitions. There can be no
assurance that additional capital, if and when required, will be available on
terms acceptable to the Company, or at all. In addition, future issuances of
equity securities, will result in dilution to the shareholders of the Company.
See the Cautionary Statements set forth in the Company's Form 10-K Annual Report
for the year ended March 26, 1999 for a discussion of risks relating to the
Company's acquisition program.

  The Company believes that its existing working capital, estimated cash flow
from operations and funds available under its line of credit will enable it to
finance its anticipated growth in sales, to complete anticipated acquisitions
and to finance anticipated stock repurchases for at least the next 12 months.

                                       10
<PAGE>

Inflation
---------

     The Company does not believe that the relatively moderate rates of
inflation over the past three years have had a significant effect on its net
sales or its profitability.


New Accounting Standards

  In March 1998, Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed for or Obtained for Internal Use," was issued,
which is effective for fiscal years beginning after December 15, 1998. SOP 98-1
requires capitalization and amortization of qualified computer software costs
over its estimated useful life.  The Company adopted SOP 98-1 effective March
27, 1999.  See Note 4 to the Condensed Consolidated Financial Statements above.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company's results of operations are exposed to changes in interest
rates primarily with respect to borrowings under its credit facility, where
interest rates are tied to the prime rate or LIBOR. Under its current policies,
the Company does not use interest rate derivative instruments to manage exposure
to interest rate changes. Based on the current levels of debt, the exposure to
interest rate fluctuations is not considered to be material. The Company is also
exposed to currency fluctuations, primarily with respect to its product
purchases in Taiwan. While all transactions with Taiwan are conducted in U.S.
Dollars, changes in the relationship between the U.S. dollar and the New Taiwan
dollar might impact the price of products purchased in Taiwan. The Company might
not be able to pass on any price increases to customers. Under its present
policies, the Company does not attempt to hedge its currency exchange rate
exposure.

                                       11
<PAGE>

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.  None
          -----------------

Item 2.   Changes in Securities and Use of Proceeds.   None
          ------------------------------------------

Item 3.   Defaults Upon Senior Securities.   None
          -------------------------------

Item 4.   Submission of Matters to a Vote of Security Holders. None
          ---------------------------------------------------

Item 5.   Other Information.
          -----------------

          a.  Management Information Systems and Year 2000 Issue.  In January
1998, the Company purchased a comprehensive enterprise software package for
accounting, distribution and  inventory planning. During the initial phases of
the implementation of the package, the Company determined that the package would
not meet the needs of the Company. In October 1998, the Company entered into an
agreement with a new vendor for the purchase of a new software package to be
installed on an enterprise basis.   To date, the Company has expended an
aggregate of approximately $3.4 million on hardware and software relating to the
installation of a new enterprise software package and estimates that it will
spend an additional $1.8 million over the next 24 months to complete the
installation and to make the system fully operational.  As the Company is still
in the initial phases of the implementation and such an implementation involves
uncertainty, there can be no assurance that the actual costs will not exceed the
estimate.  To date, the costs have been paid using funds generated from
operating cash flow or the sale of assets and it is anticipated that future
costs will be paid from existing working capital or from cash flow from
operations.

          At the present time, the Company estimates that the new enterprise
software system, which will consolidate the Company's various systems and
address a number of management concerns, will be installed and operating
company-wide in approximately 24 months.  Because this installation will not be
operational in time to address the Year 2000 issues, the Company has engaged
consultants to modify its various operating systems and it expects to have all
systems Year 2000 compliant by the end of October 1999, at a cost which the
Company estimates to be less than $300,000.  Because of the uncertainties
involved, there can be no assurance that the modifications will be completed on
time, that they will be effective in addressing all the Year 2000 issues or that
the costs will not exceed estimates.  A failure of the modification program
could have a material adverse impact on the Company and its operations.

          Management is uncertain about the Year 2000 compliance status of its
major suppliers and is having discussions with these suppliers to ascertain
whether the Company needs to implement contingency purchasing of critical parts
in anticipation of Year 2000.  Because of the nature of the Company's customers
(numerous collision repair shops located throughout most of the United States
that primarily place orders telephonically), it does not anticipate any
significant Year 2000 problems with customers.

          The costs of the projects described above, and the date on which the
Company believes it will complete the Year 2000 modifications, are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources and
other factors.  However, there can be no guarantee that these time or cost
estimates will be achieved, and actual results could differ materially from
those anticipated.  Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes and
similar uncertainties.

          b.  Pending Class Action.  In July 1997, certain individuals (the
"plaintiffs") initiated a class action lawsuit against State Farm Mutual
Automobile Insurance Company ("State Farm") in the Illinois Circuit Court in
Williamson County (Marion, Illinois), which asserts claims for breach of
contract, consumer fraud and equitable relief relating to State Farm's practice
of sometimes specifying the use of parts manufactured by sources other than the
original equipment manufacturer ("non-OEM crash  parts") when adjusting claims
for damage to insured vehicles.  It is alleged that this practice breaches State
Farm's insurance agreements with its policyholders and is a violation of the
Illinois Consumer Fraud and Deceptive Business Practices Act because non-OEM
crash parts are inherently inferior to OEM crash parts and, consequently,
vehicles are not restored to their "pre-loss condition" as specified in the
policy.  While the Company is not a party to this lawsuit, a substantial portion
of the Company's business consists of the distribution of non-OEM crash parts to
collision repair shops for use in repairing automobiles, the vast majority of
which are covered by insurance policies.

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<PAGE>

          The Williamson County Court certified a near-nationwide class on an ex
parte basis on the date the lawsuit was filed. Subsequently, after a hearing on
December 5, 1997, the Circuit Court again certified a national class, consisting
of all persons in the United States (except residents of Arkansas and Tennessee)
insured by a State Farm vehicle casualty insurance policy who had non-OEM crash
parts installed on their vehicles (or were compensated based upon the cost of
these non-OEM crash parts).  In December 1997, State Farm petitioned the
Illinois Supreme Court, for an order that the certification violated State
Farm's due process rights and infringed the sovereignty of other states.  The
petition was neither granted nor denied.  Again in February 1998, State Farm
filed a petition with the Illinois Supreme Court which was denied without
comment on March 24, 1998.  In June 1998, State Farm filed a petition for a writ
of certiorari with the United States Supreme Court on various constitutional
grounds, unrelated to the breach of contract issue.  State Farm's petition was
supported by nine amicus briefs, including briefs filed by four public interest
groups -- Public Citizen, the Center for Auto Safety, the Consumer Federation of
America and the Massachusetts Public Interest Research Group.  The petition was
denied.  A trial on the merits commenced on August 10, 1999.

          The plaintiffs acknowledged in their filings with the United States
Supreme Court that to prevail on the merits in the class action, they must prove
that all non-OEM crash parts (estimated to be over 30,000 unique crash parts,
     ---
manufactured by many companies around the world) are categorically and
inherently inferior to OEM crash parts.  Many of these non-OEM crash parts are
evaluated by the Certified Automotive Parts Association ("CAPA"), a non-profit
association of insurance companies, manufacturers, distributors, collision
repair shops and consumer groups.  Using an independent testing laboratory,
which compares the functional equivalence of non-OEM crash and OEM crash parts,
CAPA certifies the quality of these non-OEM crash parts.

          While a recent media report has questioned the quality of some non-OEM
crash parts, the Company, which is the largest distributor of non-OEM crash
parts in the United States, believes that substantially all of the non-OEM crash
parts which it distributes are of similar quality to OEM crash parts and when
installed in a competent manner by collision repair shops, vehicles are restored
to their "pre-loss condition."  Consequently, the Company does not believe that
the plaintiffs in this class action should prevail.

          However, the Company is not a party to the litigation, does not
control the defense in any manner and it is impossible to predict the outcome of
a jury trial on the merits.  If a jury were to find against State Farm, it could
become financially unacceptable for State Farm and other automobile insurers to
specify non-OEM crash parts similar to those distributed by the Company.  Such
an event would have a material adverse effect on the Company.


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

          a.   Exhibits - None
          b.   Reports on form 8-K - None

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<PAGE>

                                  SIGNATURES



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



                              KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                         By:   /S/ John M. Palumbo
                               -------------------
                              John M. Palumbo
                              Chief Financial Officer
                              (Duly Authorized Officer and Principal Financial
                               and Accounting Officer)

     Date:  August 16, 1999

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