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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-Q

          [X]  Quarterly Report Pursuant to Section 13 or 15(d)
                 of the Securities Exchange Act of 1934
               For the quarterly period ended September 30, 1998

          [ ]  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 0-22580
                         ------------------------------

                                    JPE, Inc.
             (Exact name of registrant as specified in its charter)


                                    Michigan
                         (State or other jurisdiction of
                         incorporation or organization)


                                   38-2958730
                      (I.R.S. Employer Identification No.)


     775 Technology Drive, Suite 200, Ann Arbor, Michigan     48108
         (Address of principal executive offices)           (Zip Code)


                                 (734) 662-2323
              (Registrant's telephone number, including area code)


                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed, since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                     Yes  /X/                 No  / /

As of September 30, 1998, there were 4,602,180 shares of the registrant's common
stock  outstanding.  This  Quarterly  Report on Form 10-Q contains 17 pages,  of
which this is page 1.

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<PAGE>
 
                                    JPE, INC.

                                      INDEX

                                                                        Page
                                                                        ----
Part I.   Financial Information

     Item 1.  Financial Statements
              Consolidated Balance Sheets ...........................     3
              -  At September 30, 1998 and 1997 (Unaudited)
              -  At December 31, 1997 (Audited)

              Consolidated Statements of Income and
              Comprehensive Income (Unaudited) ......................     4
              -  For the Three and Nine Months Ended
                  September 30, 1998 and 1997

              Consolidated Statements of Cash Flows (Unaudited) .....     5
              -  For the Nine Months Ended
                  September 30, 1998 and 1997

              Notes to Unaudited Consolidated Financial Statements ..   6-9

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations ................... 10-15

Part II.  Other Information

     Item 4.  Submission of Matters to a Vote of Security Holders ...    15

     Item 6.  Exhibits and Reports on Form 8-K ......................    16

     Signature ......................................................    17


<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements
                                    JPE, INC.
<TABLE>
                           CONSOLIDATED BALANCE SHEETS
                    (Amounts in Thousands, Except Share Data)
<CAPTION>
                                                     At September 30,        At Dec. 31,
                                                    1998          1997          1997
                                                    ----          ----          ----
                                                        (Unaudited)
<S>                                               <C>           <C>           <C>

ASSETS

Current assets:
  Cash and cash equivalents                       $    408      $    508      $     29
  Accounts receivable, net                          18,968        43,350        37,997
  Inventory                                         26,141        44,394        39,412
  Other current assets                               3,507        11,916         8,375
                                                  --------      --------      --------

     Total current assets                           49,024       100,168        85,813

Investment in affiliate companies                   27,232          --            --
Property, plant and equipment, net                  22,138        71,665        72,981
Goodwill, net                                        7,322        31,632        31,962
Other assets                                           761         2,600         2,459
                                                  --------      --------      --------

     Total assets                                 $106,477      $206,065      $193,215
                                                  ========      ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt               $104,024      $  1,603      $105,402
  Short-term debt                                     --          10,545         7,723
  Accounts payable                                  12,049        29,114        25,219
  Accrued liabilities                                2,779         6,299         6,336
  Income taxes payable                                --             189           314
  Loan guaranty                                      1,361          --            -- 
                                                  --------      --------      --------

     Total current liabilities                     120,213        47,750       144,994

Deferred income taxes                                 --           3,725         3,804
Other liabilities                                    1,502         1,914         1,651
Long-term debt, non-current                            141       117,729         9,272
                                                  --------      --------      --------

     Total liabilities                             121,856       171,118       159,721
                                                  --------      --------      --------

Shareholders' equity:
  Preferred stock, 3,000,000 authorized,
   no shares issued and outstanding                   --            --            -- 
  Common stock, 15,000,000 authorized,
   4,602,180 shares issued and outstanding
   at September 30, 1998 and at September 30,     
   1997, no par value                               28,051        28,026        28,051
  Retained earnings (deficit)                      (43,094)        6,932         5,714
  Foreign currency translation adjustment             (336)          (11)         (271)
                                                  --------      --------      --------

     Total shareholders' equity (deficit)          (15,379)       34,947        33,494
                                                  --------      --------      --------

       Total liabilities and shareholders'
        equity                                    $106,477      $206,065      $193,215
                                                  ========      ========      ========


</TABLE>

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

<PAGE>


                                    JPE, INC.
<TABLE>
                        CONSOLIDATED STATEMENTS OF INCOME
                            AND COMPREHENSIVE INCOME
         For the Three and Nine Months Ended September 30, 1998 and 1997
                  (Amounts in Thousands, Except Per Share Data)
                                   (Unaudited)
<CAPTION>
                                                        Three Months Ended                  Nine Months Ended
                                                           September 30,                       September 30,
                                                        1998           1997                1998            1997
                                                        ----           ----                ----            ----
<S>                                                   <C>             <C>                <C>             <C>
Net sales                                             $ 49,150        $70,298            $185,217        $215,330

Cost of goods sold                                      44,257         59,801             165,885         184,418
                                                      --------        -------            --------        --------

       Gross profit                                      4,893         10,497              19,332          30,912

Selling, general and administrative expenses             7,917          7,293              23,031          21,936

Charge for subsidiaries under court ordered
  protection                                            26,555           --                29,216            -- 

Loss on sale of subsidiary                               5,268           --                 5,268            -- 

Discontinuance of stamping operations                     --             --                  --             2,250

Other expense                                            1,369              8               1,595             194

Equity in affiliate companies                             (133)          --                  (133)           -- 
                                                      --------        -------            --------        --------

Income (loss) before interest and taxes                (36,083)         3,196             (39,645)          6,532

Interest expense, net                                    3,643          2,730              10,659           7,346
                                                      --------        -------            --------        --------

       Income (loss) before taxes                      (39,726)           466             (50,304)           (814)

Income tax expense (benefit)                            (1,582)           275              (1,496)            111
                                                      --------        -------            --------        --------

       Net income (loss)                              $(38,144)       $   191            $(48,808)       $   (925)

Other comprehensive (expense) income
       Foreign currency translation adjustment              44           (258)                (65)           (271)
                                                      --------        -------            --------        --------

Comprehensive loss                                    ($38,100)       $   (67)           $(48,873)       $ (1,196)
                                                      ========        =======            ========        ========

Basic earnings (loss) per common share                  $(8.29)         $0.04             $(10.61)         $(0.20)
                                                        ======          =====             =======          =======

Weighted average shares outstanding                      4,602          4,604               4,602           4,602
                                                         =====          =====               =====           =====

Earnings (loss) per common share assuming
  dilution                                              $(8.29)         $0.04             $(10.61)         $(0.20)
                                                        ======          =====             =======          ======

Weighted average shares outstanding
  and common stock equivalents                           4,602          4,604               4,602           4,602
                                                         =====          =====               =====           =====

</TABLE>

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

<PAGE>

                                    JPE, INC.
<TABLE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Nine Months Ended September 30, 1998 and 1997
                             (Amounts in Thousands)
                                   (Unaudited)
<CAPTION>
                                                               Nine Months Ended
                                                                 September 30,
                                                            1998              1997
                                                            ----              ----
<S>                                                       <C>               <C>
Cash flows from operating activities:
   Net loss                                               $(48,808)         $   (925)
   Depreciation and amortization                             7,765             7,426
   Loss on sale of Allparts, Inc.                            5,268              -- 
   Discontinuance of stamping operations                      --               2,250
   Write-down of assets related to subsidiaries
    under court ordered protection                          29,216              -- 
   Change to equity accounting                                 559              -- 
   Disposal of property and equipment                         --                  33
   Adjustments  to  reconcile  net loss to net
    cash  provided  by (used  for) operating
    activities:
      Changes in operating assets and liabilities:
        Accounts receivable                                  7,202           (14,610)
        Inventory                                            3,602            (4,760)
        Other current assets                                   405            (1,690)
        Accounts payable                                    (2,726)            8,596
        Accrued liabilities and income taxes                  (774)           (1,960)
        Deferred income taxes                               (1,519)               541
                                                          --------          --------

           Net cash provided by (used for)
            operating activities                               190            (5,099)
                                                          --------          --------

Cash flows from investing activities:
   Purchase of property and equipment                       (2,945)          (10,687)
   Cash proceeds from sale of property and equipment          --               1,200
   Acquisition of BATCO                                       --              (5,518)
                                                          --------          --------

           Net cash used for investing activities           (2,945)          (15,005)
                                                          --------          ---------

Cash flows from financing activities:
   Sale of common stock                                       --                  77
   Repayments of other debt                                   (363)           (1,540)
   Net borrowings under revolving loan                          62            15,621
   Net borrowings under Canadian credit facility             3,983             3,501
   Borrowings (repayments) under capital lease                (195)            1,571
   Tax benefit from options                                   --                  28
                                                          --------          --------

           Net cash provided by financing activities         3,487            19,258
                                                          --------          --------

   Effect of currency translation on cash                     (353)               38
                                                          --------          --------

Cash and cash equivalents:
   Net increase (decrease) in cash                             379              (808)

   Cash, beginning of period                                    29             1,316
                                                          --------          --------

   Cash, end of period                                    $    408          $    508
                                                          ========          ========

</TABLE>
                   The accompanying notes are an integral part
                    of the consolidated financial statements


<PAGE>
                                                           
                                    JPE, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                             (Amounts in Thousands)


A.   BASIS OF PRESENTATION:

     The accompanying unaudited consolidated condensed financial statements have
     been prepared in accordance with generally accepted  accounting  principles
     for interim financial information. Accordingly, the financial statements 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  considered  necessary for a fair
     presentation  have  been  included,  and such  adjustments  are of a normal
     recurring  nature except as disclosed  below.  The  consolidated  financial
     statements should be read in conjunction with the financial  statements and
     notes  thereto  contained  in the JPE,  Inc.  Form 10-K for the year  ended
     December 31, 1997 and the Form 10-Q for the  quarters  ended March 31, 1998
     and June 30, 1998.


B.   INVESTMENT IN AFFILIATE COMPANIES:

     During the third quarter,  three of the Company's  subsidiaries were placed
     under court ordered  protection.  On September 15, 1998, Plastic Trim, Inc.
     ("PTI") and Starboard  Industries,  Inc. ("SBI") filed voluntary  petitions
     for relief under  Chapter 11 of the Federal  Bankruptcy  Code in the United
     States Bankruptcy Court for the Eastern District of Michigan. On August 27,
     1998, the Ontario Court (General Division)  Commercial List issued an order
     to appoint an Interim  Receiver  for JPE Canada Inc.  ("JPEC")  pursuant to
     Section 47 of the  Bankruptcy  and  Insolvency  Act of Canada.  Under these
     conditions,  generally  accepted  accounting  principles  do not  allow the
     Company  to  consolidate  these   subsidiaries  from  the  dates  of  their
     respective  filings.   The  Company  has  utilized  the  equity  method  of
     accounting  in preparing  the  financial  statements  for the quarter ended
     September 30, 1998. The Company has applied the accounting  treatment under
     various  Financial  Accounting  Standards to write down the assets of these
     subsidiaries to estimated net realizable  value. The following  adjustments
     were recorded to these balance sheet accounts:

<TABLE>
<CAPTION>
                                            PTI         SBI         JPEC        Total
                                            ---         ---         ----        -----
<S>                                       <C>          <C>         <C>         <C>
     Goodwill                             $13,222      $5,333        --        $18,555
     Fixed assets                           8,000        --          --          8,000
     Accounts receivable                    1,156         350        --          1,506
     Inventory                              1,759        --          --          1,759
     Patents                                 --          --        $1,300        1,300
     Loan guarantee                          --          --         1,361        1,361
     Other assets                            --          --           100          100
                                          -------      ------      ------      -------

          Total                           $24,137      $5,683      $2,761      $32,581
                                          =======      ======      ======      =======

     These charges have been reflected on the income  statement in the following
     captions:

     Cost of sales                        $ 1,759        --          --        $ 1,759
     Selling, general and
       administrative                       1,156      $  350      $  100        1,606
     Charge for subsidiaries
       under court ordered protection      21,222       5,333       2,661       29,216
                                          -------      ------      ------      -------

          Total                           $24,137      $5,683      $2,761      $32,581
                                          =======      ======      ======      =======

</TABLE>

<PAGE>

     The Investment in affiliate companies on the Balance Sheet at September 30,
     1998 is comprised of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                            PTI         SBI         JPEC        Total
                                            ---         ---         ----        -----
<S>                                       <C>          <C>         <C>         <C>
     Cash                                 $   359      $   333        --       $   692
     Receivables                            9,000        2,497     $ 8,120      19,617
     Inventory                              5,185          478       3,918       9,581
     Other Current Assets                     692          781         474       1,947
     Property, Plant and Equipment, Net    17,062        4,584      15,075      36,721
     Other Assets                             420        1,525        --         1,945
                                          -------      -------     -------     -------

     Total Assets                          32,718       10,198      27,587      70,503

     Current Portion of Long-Term Debt        399          100      19,216      19,715
     Accounts Payable                       5,073        1,485       7,986      14,544
     Accrued Liabilities                      561          324       1,517       2,402
     Other Liabilities                        677          781         352       1,810
     Debtor-in-Possession Financing         3,455        1,345        --         4,800
                                          -------      -------     -------     -------

         Total Liabilities                 10,165        4,035      29,071      43,271

         Net Equity (Deficit)             $22,553      $ 6,163     $(1,484)    $27,232
                                          =======      -======     =======     =======

</TABLE>

     The  following  unaudited  pro  forma  summary  for the nine  months  ended
     September  30, 1998 and 1997 assumes that  effective  January 1, 1997,  the
     above companies were no longer treated as consolidated subsidiaries.  These
     companies  will be  reflected  using the equity  method  from their  filing
     dates.  The pro forma  information  reflects  the JPE  Consolidated  Income
     Statement  with  the  exclusion  of  these   companies'   results  and  the
     elimination  of the  write-downs  noted  above that are  reflected  in JPE,
     Inc.'s  books at  September  30, 1998 and the sale of  Allparts,  Inc.,  as
     discussed in Note C (amounts in thousands, except per share amounts):

                                                  Nine Months Ended Sept. 30,
                                                     1998             1997
                                                     ----             ----

     Revenues                                       $85,452          $84,900
     Income (loss) before income taxes               (2,304)           1,569
     Net income (loss)                               (2,636)             477

     Earnings (loss) per common share                $(0.57)           $0.10


C.   SALE OF ALLPARTS, INC.:

     On October 28, 1998, the Company completed the sale of substantially all of
     the assets of its wholly-owed subsidiary,  Allparts, Inc., to R&B, Inc. for
     $10,095,000  and  the  assumption  of  trade  and  accrued  liabilities  of
     $1,543,000, for a total sales price of $11,638,000. The expenses related to
     this transaction totaled $242,000. The assets of Allparts,  Inc. on October
     28, 1998 totaled  $16,664,000.  The loss on the sale of Allparts,  Inc. was
     $5,268,000  and has been  reflected in the September 30, 1998 balance sheet
     as a charge to  goodwill  of  $4,614,000  and a charge  to fixed  assets of
     $654,000. The net proceeds of $9,891,000 were used to pay down debt.

<PAGE>

D.   INVENTORY:

     Inventories by component are as follows:

                           Sept. 30, 1998      Sept. 30, 1997      Dec. 31, 1997
                           --------------      --------------      -------------

     Finished goods            $16,616             $19,030             $19,309
     Work in process             1,232               4,337               2,435
     Raw material                5,476              18,394              15,211
     Tooling                     2,817               2,633               2,457
                               -------             -------             -------

                               $26,141             $44,394             $39,412
                               =======             =======             =======


E.   INCOME TAXES:

     At September 30, 1998, $4.7 million and $1.7 million in valuation  reserves
     related to the tax benefits  associated with losses in the U.S. and Canada,
     respectively,  have been recorded.  The tax benefit reflected on the income
     statement is the result of the  elimination of net deferred tax liabilities
     due to the losses associated with the bankruptcy filings.


F.   DEBT:

     The Company was in default  under its credit  agreement  with its U.S. bank
     group.  The  Company  has a  Forbearance  Agreement  under which the lender
     agreed to grant  certain  accommodations  and to forbear  until  January 1,
     2000.  This Agreement  provides  financing  based on an asset  formula.  At
     September 30, 1998, the borrowings under the Forbearance  Agreement totaled
     $103.9 million. This Agreement provides continued financing for the Company
     and its  subsidiaries  that have not filed for  bankruptcy.  The  Agreement
     provides that any proceeds from pre-petition inventory and receivables will
     be used to  permanently  reduce debt under the  Forbearance  Agreement.  In
     addition,  under  the  Bankruptcy  Court  order,  any sale of  pre-petition
     collateral  other than  inventory  and  receivables  will first reduce debt
     under the  Forbearance  Agreement  for PTI of $8.4  million and SBI of $3.6
     million and then be used to reduce  post-petition  debt, with any remaining
     proceeds to be applied to debt under the Forbearance  Agreement  subject to
     certain offsets.

     PTI and SBI have  post-petition  loans as provided  by a  financing  order,
     which are collateralized by post-petition receivables and inventories.  The
     debtor-in-possession financing agreements provide for up to $21 million for
     PTI and up to $6 million for SBI. These debt  instruments  are reflected on
     the consolidated  balance sheet through  investment in affiliate  companies
     (see Note B).


G.   DISCONTINUANCE OF STAMPING OPERATIONs:

     On May 15, 1997, the Company  announced a plan to discontinue  its stamping
     operations at its East Tawas,  Michigan  facility of SBI. The plan included
     resourcing  stamped  parts to third party  suppliers,  the sale of stamping
     assets and a reduction in the SBI workforce.  As a result of this plan, the
     Company recorded a charge of $2.25 million comprised of the following:

     Loss on sale of fixed assets                       $1,348
     Severance expenses                                    365
     Adjustment to scrap value of inventory                407
     Other                                                 130
                                                        ------

        Total                                           $2,250


<PAGE>


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

The following  discussion  should be read in conjunction  with the  consolidated
financial statements and notes thereto filed with the Company's Annual Report on
Form 10-K to assist in understanding  the Company's  results of operations,  its
financial position,  cash flows,  capital structure and other relevant financial
information.

Forward Looking Information
---------------------------

This Quarterly  Report on Form 10-Q contains,  and from time to time the Company
expects to make,  certain  forward-looking  statements  regarding  its business,
financial  condition and results of  operations.  In  connection  with the "Safe
Harbor"  provisions  of the Private  Securities  Reform Act of 1995 (the "Reform
Act"),  the Company intends to caution readers that there are several  important
factors that could cause the Company's actual results to differ  materially from
those projected in its forward-looking statements, whether written or oral, made
herein or that may be made  from  time to time by or on  behalf of the  Company.
Readers are cautioned that such forward-looking  statements are only predictions
and that actual events or results may differ materially.  The Company undertakes
no  obligation  to  publicly  release  the  results  of  any  revisions  to  the
forward-looking  statements to reflect events or circumstances or to reflect the
occurrence of unanticipated events.

The Company wishes to ensure that any forward-looking statements are accompanied
by  meaningful  cautionary  statements  in order to comply with the terms of the
safe harbor provided by the Reform Act. Accordingly, the Company has set forth a
list of  important  factors  that could cause the  Company's  actual  results to
differ  materially  from  those  expressed  in  forward-looking   statements  or
predictions made herein and from time to time by the Company.  Specifically, the
Company's  business,  financial  condition  and results of  operations  could be
materially different from such  forward-looking  statements and predictions as a
result of (i) customer pressures that could impact sales levels and product mix,
including customer sourcing decisions,  customer evaluation of market pricing on
products produced by the Company and customer  cost-cutting  programs;  (ii) the
impact on  operations  and cash  flows of labor  strikes  at the  Company's  OEM
customers; (iii) operational difficulties encountered during the launch of major
new OEM programs;  (iv) the ability of the Company to control scrap rates at its
operations;  (v) the ability of the Company to achieve  expected  cost  savings;
(vi) the ability of the Aftermarket  Group to balance the cyclical nature of the
OEM  industry;  (vii) the  availability  of funds to the Company  for  continued
operations during the sale process; (viii) the granting of compliance waivers by
the Company's lenders; and (ix) the timing and amount of proceeds from the sales
of the Company's businesses.

<PAGE>

Year 2000
---------

The Company has several  business  systems that require  updating to become Year
2000  compliant.  The Company's  manufacturing  operations do not rely on highly
sophisticated  date driven  processes  and, as such,  compliance  with Year 2000
requirements is not significant in the manufacturing area. Each of the Company's
business  systems is being updated or a replacement  system is being  purchased.
The Company  estimates that the total cost of becoming  compliant with Year 2000
is in the range of $1 million to $1.5 million.

The  Company  is also in  contact  with  its  customers  and  suppliers  and has
requested  that they  complete  questionnaires  to  determine  any impact on the
Company's operations.  In general, the suppliers and customers have developed or
are in the process of developing plans to address Year 2000 issues.  The Company
will continue to monitor and evaluate the progress of suppliers and customers on
this critical matter.

Based on the  progress the Company has made in  addressing  its Year 2000 issues
and the plans and  timelines  to complete  this  project,  the Company  does not
foresee significant risks associated with its Year 2000 compliance at this time.
The Company has not developed a detailed contingency plan, but given the current
status of its progress, it appears that all systems will be compliant.  However,
if the Company identifies  significant risks related to its Year 2000 compliance
or its progress deviates from the anticipated timeline, the Company will develop
contingency plans as deemed necessary at that time.

<PAGE>

RESULTS OF OPERATIONS

Third Quarter Ended September 30, 1998 compared to
Third Quarter Ended September 30, 1997
--------------------------------------------------

During the third quarter,  three of the Company's subsidiaries were placed under
court ordered protection.  On September 15, 1998, Plastic Trim, Inc. ("PTI") and
Starboard  Industries,  Inc. ("SBI") filed voluntary  petitions for relief under
Chapter 11 of the Federal  Bankruptcy Code in the United States Bankruptcy Court
for the Eastern  District of  Michigan.  On August 27, 1998,  the Ontario  Court
(General  Division)  Commercial  List  issued  an order to  appoint  an  Interim
Receiver for JPE Canada Inc.  ("JPEC")  pursuant to Section 47 of the Bankruptcy
and  Insolvency  Act of Canada.  Collectively,  these  companies  represent  the
Company's Trim Group.  Under these  conditions,  generally  accepted  accounting
principles do not allow the Company to consolidate  these  subsidiaries from the
dates of their respective filings. The Company has utilized the equity method of
accounting in preparing the financial statements for the quarter ended September
30, 1998. The  discussion  below compares the third quarter of 1997 to the third
quarter of 1998 which includes JPEC for only 60 days and PTI and SBI for only 77
days.

Net sales for the quarter ended  September 30, 1998 were $49.2 million  compared
to $70.3 million for the three months ended  September  30, 1997.  The net sales
decrease of 30% is  partially  attributable  to the  exclusion  of sales for the
subsidiaries  under court ordered  protection from their respective filing dates
which totaled $10.0 million.  The Company's  Original  Equipment  Manufacturers'
("OEM's")  businesses estimated lost sales for the month of July at $6.5 million
due to the strike at GM. In addition,  $1.5 million of the sales decline was due
to the  discontinuance of SBI's stamping business in the fall of 1997. Sales for
the Aftermarket  businesses  declined 12% compared to the same quarter last year
due to the uncertainty associated with the Company's financial stability and the
decision to  eliminate  Dayton  Parts'  heavy duty drum  product  line.  For the
quarter  ended  September  30,  1998,  net sales were  approximately  56% to OEM
customers and 44% to Aftermarket customers.

<PAGE>

Gross  profit  decreased  by $5.6  million to $4.9  million for the three months
ended  September  30, 1998 as compared with $10.5 million for the same period of
the prior year.  This decrease  includes  $1.8 million of  additional  inventory
excess and obsolescence  recognized in conjunction with PTI's bankruptcy filing.
The gross profit  percentages,  excluding the additional excess and obsolescense
adjustment,  were  13.5% and 14.9%  for 1998 and 1997,  respectively.  The gross
margin  decreased  because of the  exclusion of the Trim Group from their filing
dates totaling approximately $1 million and the reduction attributable to the GM
strike  of  approximately  $1  million.  The  remaining  difference  of  $1.9 is
primarily  attributable  to lower  sales  volume  and  pricing  pressure  in the
Aftermarket  business  and  manufacturing  variances  at PTI  relating  to a new
program launch.

Selling,  general and administrative expenses increased 8.6% to $7.9 million for
the three  months ended  September  30, 1998 as compared to $7.3 million for the
three months ended  September 30, 1997. The  percentage of selling,  general and
administrative  expenses to net sales was 16.1% for the quarter ended  September
30, 1998 as compared to 10.4% for the same period of the prior year.  The higher
percentage is partially attributable to recognition of a $1.1 million receivable
offset granted to the two major  customers of PTI and SBI in accordance with the
bankruptcy  order.  Other  factors  related to the  increase  in the  percentage
include a $300,000  additional  allowance for bad debts,  fixed costs associated
with lower sales in the Aftermarket business and a charge of $360,000 related to
a workers' compensation claim for the quarter ended September 30, 1998.

The charge for subsidiaries  under court ordered protection for the three months
ended  September  30, 1998 totaled  $26.6  million.  This charge  related to the
impairment  of  long-term  assets  in PTI  and  SBI as  shown  in  Note B to the
financial statements. The Company believes that the charge reduces the assets of
such businesses to net realizable  value in accordance  with generally  accepted
accounting principles. This charge has no impact on the Company's cash flow.

On October 28, 1998,  the Company  completed the sale of  substantially  all the
assets of its subsidiary, Allparts, Inc. The sales price was approximately $11.6
million,  consisting of cash of $10.1 million and assumption of accounts payable
and accrued liabilities. The assets on October 28, 1998 were approximately $16.7
million and expenses related to this  transaction were $242,000,  resulting in a
net loss on the sale of $5.3 million.  The Company has  recognized  this loss in
September  by a  write-down  of goodwill  and fixed  assets of $4.6  million and
$654,000,  respectively.  The net cash  proceeds  after payment of expenses were
used to reduce debt.

Other expense primarily  represents costs associated with the bankruptcy filings
for legal professionals and financial advisors.

Interest expense for the third quarter ended September 30, 1998 was $3.6 million
compared to $2.7 million for the same period as last year.  The higher  interest
expense  is the  result of the  defaults  on the  Company's  debt  arrangements,
raising the effective interest rate to approximately 11%.

<PAGE>

Consolidated  income tax benefit for the quarter  ended  September  30, 1998 was
$1.6 million.  Although the Company  recorded a pretax loss of $39.7 million for
the  quarter,  the normal tax benefit was  reduced by a recording  of  valuation
reserves of $4.7  million.  The tax expense of  $275,000  for the quarter  ended
September 30, 1997 related to pretax profit for that quarter.

Consolidated  net loss for the three months ended  September  30, 1998 was $38.1
million as compared  to a net income of  $191,000 in the third  quarter of 1997.
Loss per share for the third  quarter of 1998 was $8.29 as  compared to earnings
per share of $0.04 during the same period in 1997.


Nine Months Ended September 30, 1998 compared to
Nine Months Ended September 30, 1997
------------------------------------------------

Net sales for the nine months  ended  September  30,  1998 were  $185.2  million
compared to $215.3 million for the nine months ended September 30, 1997. The net
sales decrease of 14% is attributable to the exclusion of the Trim Group's sales
of $10 million from their filing dates,  the impact of the strike at GM totaling
$8.5  million  and lower  sales of $7  million  due to  discontinuance  of SBI's
stamping  business in the fall of 1997. For the nine months ended  September 30,
1998, net sales were  approximately  62% to OEM customers and 38% to Aftermarket
customers.

Gross profit  decreased 37% to $19.3 million for the nine months ended September
30, 1998 as compared with $30.9 million for the  comparable  period of the prior
year.  The  gross  profit  percentages  were  10.4% and 14.4% for 1998 and 1997,
respectively.  This  decline  in  percentages  is  attributable  to the  matters
mentioned  in the thid quarter  discussion,  lower margin at PTI and JPEC due to
high scrap rates in the first quarter and, to a lesser  extent,  lower margin in
the  Aftermarket  businesses due to factory  variances in the  manufacturing  of
heavy duty springs and from pricing pressure.

Selling,  general and administrative expenses increased to $23.0 million for the
nine months  ended  September  30,  1998 over $21.9  million for the nine months
ended September 30, 1997. The percentage of selling,  general and administrative
expenses to net sales was 12.4% for the nine months ending September 30, 1998 as
compared to 10.1% for the  comparable  period of the prior year.  In addition to
the items discussed in the third quarter  comparison,  the higher  percentage is
also related to lower sales volume and higher  costs  associated  with the heavy
duty truck Aftermarket business.

The  charge  for  subsidiaries  includes  the items  related  to the PTI and SBI
bankruptcy  filings as explained in the third quarter  discussion  above. In the
second  quarter,  the Company had recorded an asset  impairment  of $2.7 million
related to JPEC, for which an Interim  Receiver was appointed.  The total charge
for long-term asset impairment for all companies under court ordered  protection
is $29.2 million for the nine months ended  September 30, 1998. The  substantial
portion of this charge has been for  goodwill  ($18.6  million) and fixed assets
($8.0 million).

<PAGE>

The loss on sale of  subsidiary  and other  expense  is  explained  in the third
quarter discussion above.

Net  interest  expense  increased  to $10.7  million for the nine  months  ended
September  30,  1998 as  compared  to $7.3  million  for the nine  months  ended
September  30,  1997.  The increase is  attributable  to higher  interest  costs
associated with the defaults on the Company's debt arrangements.

Income tax benefit for the nine months ended September 30, 1998 was $1.5 million
as  compared to tax  expense of  $111,000  for the same period of 1997.  The tax
benefit is a result of the  associated  losses  relating  to the charges for the
court ordered  protection  filings.  The amount of tax benefit was determined by
the elimination of the net deferred tax liabilities previously recognized on the
balance sheet.  The Company has recorded a valuation  reserve of $6.5 million to
offset  deferred  tax assets that relate to pre-tax  loss,  in  accordance  with
Financial Accounting Standard 109, "Accounting for Income Taxes."

Net loss for the nine months ended September 30, 1998 was $48.8 million compared
to net loss of $925,000  over the same period in 1997.  The increase in the loss
is a result of the factors  summarized  above. Loss per share for the first nine
months of 1998 was $10.62 as compared to loss per share of $0.20 during the same
period in 1997.


LIQUIDITY AND CAPITAL RESOURCES

The Company's  principal  sources of liquidity are its U.S. and Canadian  credit
agreements and its debtor-in-possession financing agreements for SBI and PTI.

U.S. Operations
---------------

The  Company's  principal  source of  liquidity  for its U.S.  companies  is the
Forbearance  Agreement dated August 10, 1998 (the "Forbearance  Agreement"),  as
amended  by First  Amendment  dated  August 31,  1998,  Second  Amendment  dated
September 4, 1998, Third Amendment dated September 16, 1998 and Fourth Amendment
dated October 1, 1998. The Forbearance Agreement is collateralized by all of the
Company's  assets,  with the exception of JPEC's assets,  the inventories of SBI
and PTI, and the post-bankruptcy petition accounts receivable of SBI and PTI. At
September  30, 1998,  borrowings  outstanding  under the  Forbearance  Agreement
totaled $103.9 million.

<PAGE>

The Company's  Third Amended and Restated  Credit  Agreement  dated December 31,
1996 (the "Credit  Agreement"),  as amended by Amendment No. 1 dated as of April
16, 1997, Amendment No. 2 dated as of August 14, 1997 (effective June 30, 1997),
Amendment  No. 3 dated as of February 13, 1998 and  Amendment  No. 4 dated as of
May 15, 1998 expired on October 27, 1998.

Pursuant to the Fourth Amendment to the Forbearance Agreement, the lender agreed
to grant certain accommodations and to forbear until January 1, 2000. The Fourth
Amendment to the Forbearance  Agreement provides for financing based on an asset
formula with maximum  borrowings ranging from a low of $84.9 million in November
1998 to a high of $95.9  million in October  1998 plus an  over-formula  ranging
from a low of $42.7  million  in  November  1998 to a high of $48.2  million  in
December 1999.

At September 30, 1998,  Current  Liabilities  exceeded  Current  Assets by $71.2
million,  reflecting  the  classification  of the U.S. debt  agreement of $103.9
million as current liability.  Excluding the debt agreement,  working capital at
September 30, 1998 would have been $32.8 million as compared to $53.9 million at
December 31, 1997.  The lower level of working  capital is due to the accounting
treatment of the subsidiaries under court ordered protection.


SBI and PTI
-----------

In connection  with the filing for protection from creditors under Chapter 11 of
the U.S.  Bankruptcy Code for SBI and PTI (the "debtor  companies"),  the debtor
companies  entered into separate  debtor-in-possession  financing  agreements to
provide for  post-petition  financing  (the "DIP  financing")  which  expires on
September 15, 2000.

PTI obtained DIP financing  which  provides for up to $21 million in asset based
loans with an  out-of-formula  allowance  of not to exceed $6 million.  PTI paid
closing  fees in the amount of  $105,000  and will pay monthly  service  fees of
$3,500  plus a  one-time  facility  fee  of  $52,500.  At  September  30,  1998,
borrowings outstanding under PTI's DIP financing totaled $3.5 million.

SBI obtained DIP  financing  which  provides for up to $6 million in asset based
loans with an  out-of-formula  allowance  of not to exceed $2 million.  SBI paid
closing  fees in the  amount of $30,000  and will pay  monthly  service  fees of
$1,000  plus a  one-time  facility  fee  of  $15,000.  At  September  30,  1998,
borrowings outstanding under SBI's DIP financing totaled $1.3 million.

<PAGE>

JPE Canada Operations
---------------------

The principal  source of liquidity for JPEC is a Cdn. $28.7 million (U.S.  $18.7
million)  credit  agreement with a Canadian bank. The Canadian  Credit  Facility
permits JPEC to borrow funds in the form of advances for operating  requirements
and capital  expenditures.  Advances  under the  Canadian  Credit  Facility  are
collateralized by substantially all of the assets of JPEC. Interest rates on the
advances  are computed at either the  Canadian  Prime Rate or the Base Rate,  as
defined in the agreement.  At September 30, 1998,  borrowings under the Canadian
Credit Facility totaled Cdn. $29.4 million (U.S. $19.2 million).

JPEC is not in compliance with its loan covenants and its lender has made demand
for payment and given notice of its intention to enforce its security interests.
In order to ensure  production  for its only  customer,  JPEC has  entered  into
certain  accommodation  agreements  with its lender and its only  customer  that
permit continued  operating  activities under certain  conditions and covenants,
including additional  out-of-formula funding in the amount of Cdn. $8.0 million.
The Company has informed the lender and its only customer that JPEC is insolvent
and has no present  ability  to repay in full the  indebtedness  to the  secured
creditors.  In addition, the Company does not believe that the proceeds from the
sale of JPEC will be adequate to satisfy its debt obligations to the lender, its
only customer and unsecured creditors.

The  Company has  provided an  unsecured  guarantee  in the amount of Cdn.  $2.0
million for a portion of the JPEC debt which was recorded as a liability at June
30, 1998. JPEC's lender has no additional recourse to the assets of JPE, Inc.

<PAGE>

                           PART II. OTHER INFORMATION

                                    JPE, INC.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of  Shareholders of JPE, Inc. was held on September 30, 1998,
for the purpose of electing two  directors of JPE,  Inc. for a term to expire in
2001.  Proxies for the meeting were  solicited  pursuant to Section 14(a) of the
Securities  Exchange Act of 1934 and there was no  solicitation in opposition to
management's solicitation.

Management's  nominees  for  directors  as listed in the  proxy  statement  were
elected with the following votes:

                                     Shares                 Shares
                                   Voted "For"            "Withheld"
                                   -----------            ----------

         David E. Cole               2,699,661              31,575
         John F. Daly                2,699,661              31,575

Following the election,  the Company's Board of Directors consisted of Mr. Cole,
Mr. Daly, Otto Gago and Donald R. Mandich.


Item 6. EXHIBITS AND REPORTS ON FORM 8-K

     a.   Exhibits:

          10.1 First  Amendment  dated August 31, 1998 to Forbearance  Agreement
               dated August 10, 1998 among the Banks,  Comerica  Bank, as Agent,
               JPE, Inc. and its subsidiaries, filed with this report.

          10.2 Second Amendment dated September 4, 1998 to Forbearance Agreement
               dated  August 10,  1998,  as amended,  among the Banks,  Comerica
               Bank, as Agent, JPE, Inc. and its  subsidiaries,  filed with this
               report.

          10.3 Third Amendment dated September 16, 1998 to Forbearance Agreement
               dated August 10, 1998 as amended, among the Banks, Comerica Bank,
               as Agent, JPE, Inc. and its subsidiaries, filed with this report.

          10.4 Fourth  Amendment dated October 1, 1998 to Forbearance  Agreement
               dated  August 10,  1998,  as amended,  among the Banks,  Comerica
               Bank, as Agent, JPE, Inc. and its  subsidiaries,  filed with this
               report.

          10.5 Final Order  Authorizing  Postpetition  Financing  and  Providing
               Adequate  Protection  for Plastic  Trim,  Inc.  dated October 29,
               1998.

<PAGE>

          10.6 Final Order  Authorizing  Postpetition  Financing  and  Providing
               Adequate Protection for Starboard Industries,  Inc. dated October
               29, 1998.

          10.7 Stay Bonus Agreement, dated as of September 1, 1998, between JPE,
               Inc. and Donna L. Bacon.

          10.8 Stay Bonus  Agreement,  dated as of September  21, 1998,  between
               JPE, Inc. and James J. Fahrner.

          10.9 Stay Bonus  Agreement,  dated as of September  30, 1998,  between
               JPE, Inc. and Karen A. Radtke.


     b.   Report on Form 8-K:

          On September 29, 1998, Registrant filed a report on Form 8-K reporting
          that  two  of its  subsidiaries,  Plastic  Trim,  Inc.  and  Starboard
          Industries,  Inc.,  had filed  voluntary  petitions  for relief  under
          Chapter  11 of  the  Federal  Bankruptcy  Code  in the  United  States
          Bankruptcy Court for the Eastern District of Michigan.

          On November 12, 1998,  Registrant filed a report on Form 8-K reporting
          that  substantially all of the assets of its wholly-owned  subsidiary,
          Allparts,  Incorporated,  had been sold to R&B,  Inc.,  on October 28,
          1998.


<PAGE>

                                    JPE, INC.

                                    SIGNATURE


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

                                         JPE, Inc.


                                         By: /s/ James J. Fahrner
                                             --------------------------
                                             James J. Fahrner
                                             Chief Financial Officer
                                             (Principal Financial Officer and
                                             Principal Accounting Officer)


Date:  November 16, 1998