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 DECEMBER 31,
         1996.

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________
         TO___________.

                           Commission File No. 0-23538

                       MOTORCAR PARTS & ACCESSORIES, INC.
                       ----------------------------------
             (Exact name of registrant as specified in its charter)

           New York                                             11-2153962
  -------------------------------                           -------------------
  (State or other jurisdiction of                            (I.R.S. Employer
   incorporation or organization)                           Identification No.)

2727 Maricopa Street, Torrance, California                        90503
- ------------------------------------------                        -----
 (Address of principal executive offices)                        Zip Code

Registrant's telephone number, including area code: (310) 212-7910
                                                    --------------

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       | |

There were 4,866,000 shares of Common Stock outstanding at February 7, 1997.





<PAGE>



                       MOTORCAR PARTS & ACCESSORIES, INC.

                                      INDEX
                                      -----



PART I - FINANCIAL INFORMATION                                              Page


   Item 1.   Financial Statements

             Balance Sheets as of December 31, 1996 (unaudited)
                     and March 31, 1996.................................. .....3

             Statements of Operations (unaudited) for the nine and three
                     month periods ended December 31, 1996 and 1995....... ....4

             Statements of Cash Flows (unaudited) for the nine month
                     periods ended December 31, 1996 and 1995..................5

             Notes to Financial Statements (unaudited).........................6


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



PART II - OTHER INFORMATION


   Item 6.   Exhibits and Reports on Form 8-K.................................12

             Signatures.......................................................13


                                      -2-


<PAGE>




                         PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements.

                       MOTORCAR PARTS & ACCESSORIES, INC.
                                 Balance Sheets
                                 --------------

<TABLE>
<CAPTION>

                                   A S S E T S                                              
                                   -----------                                December 31,
                                                                                1996               March 31, 1996
                                                                               ------              --------------
                                                                              (Unaudited)
<S>                                                                         <C>                      <C>         
Current assets:
   Cash and cash equivalents............................................    $  1,108,000             $    164,000
   Short-term investments...............................................               0                8,336,000
   Accounts receivable - net of allowance for doubtful accounts.........      22,886,000               17,264,000
   Inventory............................................................      34,980,000               28,551,000
   Prepaid expenses and other current assets............................         709,000                  637,000
   Deferred income tax asset............................................         251,000                  226,000
                                                                              ----------               ----------
          Total current assets..........................................      59,934,000               55,178,000

Long-term investments...................................................       3,821,000                2,393,000
Plant and equipment - net...............................................       3,659,000                2,469,000
Other assets............................................................         206,000                  149,000
                                                                              ----------               ----------
          T O T A L.....................................................    $ 67,620,000             $ 60,189,000
                                                                              ==========               ==========

                                L I A B I L I T I E S
                                ---------------------
Current liabilities:
   Current portion of capital lease obligations.........................    $    795,000             $    554,000
   Accounts payable and accrued expenses................................      10,137,000                8,855,000
   Income taxes payable.................................................       1,310,000                1,331,000
   Due to affiliate.....................................................         184,000                  184,000
                                                                              ----------               ----------
          Total current liabilities.....................................      12,426,000               10,924,000

Long-term debt..........................................................      16,329,000               14,541,000
Capitalized lease obligations - less current portion....................         491,000                  594,000
Deferred income tax liability...........................................          99,000                   99,000
                                                                              ----------               ----------
          T O T A L.....................................................      29,345,000               26,158,000
                                                                              ----------               ----------

                                 SHAREHOLDERS' EQUITY
                                 --------------------

Preferred stock; par value $.01 per share, 5,000,000 shares
   authorized; none issued..............................................
Common stock; par value $.01 per share, 20,000,000 shares
   authorized;
   4,866,000 shares issued and outstanding at December 31,
   1996 and 4,819,750 issued and outstanding at March 31, 1996..........          49,000                   48,000
Additional paid-in capital..............................................      28,781,000               28,431,000
Retained earnings.......................................................       9,445,000                5,552,000
                                                                              ----------               ----------
          Total shareholders' equity....................................      38,275,000               34,031,000
                                                                              ----------               ----------
          T O T A L.....................................................     $67,620,000             $ 60,189,000
                                                                              ==========               ==========
</TABLE>


                 The accompanying notes to financial statements
                          are an integral part hereof.

                                      -3-


<PAGE>



                       MOTORCAR PARTS & ACCESSORIES, INC.

                            Statements of Operations
                            ------------------------
                                   (Unaudited)


<TABLE>
<CAPTION>
                                            For the Nine Months Ended                       For the Three Months Ended
                                                  December 31,                                      December 31,
                                            -------------------------                       --------------------------
                                            1996                  1995                      1996                  1995
                                            ----                  ----                      ----                  ----
<S>                                    <C>                    <C>                      <C>                   <C>         
Income:
   Net Sales.........................  $ 62,263,000           $ 44,990,000             $ 22,523,000          $ 17,661,000
                                         ----------             ----------               ----------            ----------
Operating expenses:
   Cost of goods sold................    49,737,000             35,694,000               17,907,000            13,975,000
   Selling expenses..................     1,725,000              1,467,000                  674,000               592,000
   General and administrative
        expenses.....................     3,632,000              3,251,000                1,257,000             1,249,000
                                         ----------             ----------               ----------            ----------
           Total operating expenses..    55,094,000             40,412,000               19,838,000            15,816,000
                                         ----------             ----------               ----------            ----------
Operating income.....................     7,169,000              4,578,000                2,685,000             1,845,000
Interest expense - net of
    interest income..................       752,000                652,000                  287,000               194,000
                                         ----------             ----------               ----------            ----------
Income before income taxes...........     6,417,000              3,926,000                2,398,000             1,651,000
Provision for income taxes...........     2,524,000              1,541,000                  936,000               626,000
                                         ----------             ----------               ----------            ----------
Net income...........................  $  3,893,000           $  2,385,000             $  1,462,000          $  1,025,000
                                         ----------             ----------               ----------            ----------
Weighted average common shares
   outstanding.......................     5,003,000              3,615,000                5,007,000             4,144,000
                                         ----------             ----------               ----------            ----------
Net income per common
   share.............................  $       0.78           $       0.66             $       0.29          $       0.25
                                         ==========             ==========               ============          ============
</TABLE>


                 The accompanying notes to financial statements
                          are an integral part hereof.

                                      -4-


<PAGE>



                       MOTORCAR PARTS & ACCESSORIES, INC.

         Statements of Cash Flows for the Nine Months Ended December 31,
         ---------------------------------------------------------------
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                           1996                 1995
                                                                           ----                 -----
<S>                                                                    <C>                   <C>        
Cash flows from operating activities:
         Net income..................................................  $ 3,893,000           $ 2,385,000
         Adjustments to reconcile net income to net
              cash provided by (used in) operating
              activities:
                  Depreciation and amortization......................      476,000               306,000
                  (Increase) decrease:
                      Accounts receivable............................   (5,622,000)           (4,543,000)
                      Inventory......................................   (6,429,000)          (10,606,000)
                      Prepaid expenses and other assets .............      (72,000)             (209,000)
                      Other assets..................................       (57,000)              (39,000)
                      Increase (decrease) in:
                           Accounts payable and accrued expenses ....    1,282,000             2,007,000
                           Income taxes payable......................      (46,000)              827,000
                           Due to related parties....................            0               110,000
                                                                        -----------           -----------

                      Net cash (used in)
                           operating activities......................   (6,575,000)           (9,762,000)
                                                                        -----------           -----------

Cash flows from investing activities:
         Purchase of property, plant and equipment...................   (1,052,000)             (275,000)
         Short-term and long-term investments........................    6,908,000            (7,350,000)
                                                                        -----------           -----------

                  Net cash provided by (used in)
                      investing activities...........................    5,856,000            (7,625,000)
                                                                        -----------           -----------

Cash flows from financing activities:
         Net increase (decrease) in line of credit...................    1,788,000              (571,000)
         Proceeds from exercised options............................       351,000                32,000
         Payments on capital lease obligation .......................     (476,000)             (178,000)
         Proceeds from secondary public offering.....................            0            20,290,000
                                                                        -----------           -----------

                  Net cash provided by
                      financing activities...........................    1,663,000            19,573,000
                                                                        -----------           -----------

NET INCREASE (DECREASE) IN CASH......................................      944,000             2,186,000

Cash - beginning of period ..........................................      164,000               611,000
                                                                        -----------           -----------

CASH - END OF PERIOD       ..........................................  $ 1,108,000            $2,797,000
                                                                        ===========           ===========

Supplemental  disclosures  of cash flow  information:  
          Cash paid during the year for:
              Interest     ..........................................  $   844,000            $  688,000
              Income taxes ..........................................    2,520,000               665,000

Non-cash investing and financing activities:
         Property acquired under capital lease.......................      338,000               397,000
</TABLE>


                 The accompanying notes to financial statements
                          are an integral part hereof.

                                      -5-


<PAGE>



                       MOTORCAR PARTS & ACCESSORIES, INC.


                    Notes to Financial Statements (Unaudited)

(NOTE A) - The Company and its Significant Accounting Policies:
- ---------------------------------------------------------------

         Motorcar Parts & Accessories, Inc. (the "Company"),  remanufactures and
distributes  alternators and starters and assembles and  distributes  spark plug
wire sets for the automotive after- market industry  (replacement parts sold for
use on vehicles after initial purchase).  The Company's alternators and starters
are produced  principally for use in imported cars. The spark plug wire sets are
produced for use in imported as well as domestic cars.  These  automotive  parts
are sold to automotive retail chains and warehouse  distributors  throughout the
United States.

         [1]      Cash equivalents:
                  -----------------

                  The Company considers all highly liquid short-term investments
with a maturity of three months or less to be cash equivalents.

         [2]      Investments:
                  ------------

                  The  Company's   marketable   securities   are  classified  as
available for sale and reported at fair value which approximates amortized cost.
Any  unrealized  gains or losses  are  classified  as a  separate  component  of
shareholders' equity.

         [3]      Accounts receivable - allowance:
                  --------------------------------

                  The Company  protects  itself to a limited  extent from losses
due  to  uncollectible  accounts  receivable  through  the  purchase  of  credit
insurance  except for  receivables  due from a limited  number of accounts  with
leading  automotive  parts retailers and certain small  customers.  Beginning in
fiscal year 1996 an allowance for estimated uncollectible accounts receivable is
provided.

         [4]      Inventory:
                  ----------

                  Inventory is stated at the lower of cost or market, cost being
determined by the average cost method.

         [5]      Revenue Recognition:
                  --------------------

                  The Company  recognizes  sales when products are shipped.  The
Company obtains used alternator and starter units, commonly known as cores, from
its  customers  as  trade-ins.   Cores  are  an  essential   material  need  for
remanufacturing operations.  Beginning with the quarter ended June 30, 1996, the
Company implemented a new accounting  presentation with respect to its reporting
of sales.  In the past,  net sales were reduced to reflect  deductions for cores
returned  for credit and cost of goods sold was reduced by the cost of the cores
returned. Under the new presentation, net sales


                                      -6-


<PAGE>


will be reported on a gross basis,  that is core returns from customers will not
be deducted in order to reach net sales,  but rather will be included in cost of
goods sold.  The nine and three months  ended  December 31, 1995 was restated to
show this change.  Formerly,  the nine and three months ended  December 31, 1995
showed  net  sales of  $31,207,000  and  $12,347,000  and cost of goods  sold of
$21,911,000 and $8,661,000, respectively.

(NOTE B)- Inventory:
- --------------------

         Inventory is comprised of the following:

                                          December 31, 1996     March 31, 1996
                                          -----------------     --------------

           Raw materials..................     $19,092,000        17,568,000

           Work-in-process................       2,970,000         3,466,000

           Finished goods.................      12,918,000         7,517,000
                                               -----------       -----------

                        T o t a l.........     $34,980,000       $28,551,000
                                               ===========       ===========

(NOTE C) - Related Parties:
- ---------------------------

         The Company conducts  business with MVR Products Co. PTE, Ltd. ("MVR").
MVR operates a shipping  warehouse which conducts  business with Unijoh Sdn, Bhd
("Unijoh").  Unijoh operates a remanufacturing  facility similar to the Company.
MVR's  warehouse  is located in  Singapore  and  Unijoh's  factory is located in
Malaysia. Two  shareholders/officers/directors  of the Company own two-thirds of
both MVR and Unijoh,  with the remaining  one-third  owned by an unrelated third
party.  All of the cores  processed  by Unijoh are produced for the Company on a
contract  remanufacturing  basis.  The cores and  other  raw  materials  used in
production  by Unijoh  are  supplied  by the  Company  and are  included  in the
Company's  inventory.  Inventory owned by the Company and held by MVR and Unijoh
was  $632,000  as  at  December  31,  1996.   The  Company   incurred  costs  of
approximately $1,248,000 and $342,000 from the affiliates for the nine and three
months ended  December 31, 1996.  The amount due to affiliate as at December 31,
1996 and March 31, 1996 was due to MVR.


                                      -7-


<PAGE>




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

                  The  following  discussion  and  analysis  should  be  read in
conjunction with the financial  statements and notes thereto appearing elsewhere
herein.

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


                                   Nine Months Ended     Three Months Ended
                                      December 31,          December 31,
                               --------------------   --------------------------

                                1996        1995        1996        1995
                               --------   ---------   ---------    --------
Net sales                       100.0%      100.0%      100.0%      100.0%
Cost of goods sold               79.9        79.3        79.5        79.1
                               --------   ---------   ---------    --------
Gross profit                     20.1        20.7        20.5        20.9
Selling expenses                  2.8         3.3         3.0         3.4
General & administrative
expenses                          5.8         7.2         5.6         7.1
                               --------   ---------   ---------    --------
Operating income                 11.5        10.2        11.9        10.4
Interest expense - net            1.2         1.5         1.3         1.1
                               --------   ---------   ---------    --------
Income before income taxes       10.3         8.7        10.6         9.3
Provision for income taxes        4.0         3.4         4.1         3.5
                               --------   ---------   ---------    --------
Net Income                        6.3%        5.3%        6.5%        5.8%
                               ========   =========   =========    ========

          Beginning   with  the  quarter  ended  June  30,  1996,   the  Company
implemented  a new  accounting  presentation  with  respect to its  reporting of
sales.  In the past,  the Company  deducted the value of all cores returned from
its customers in order to reach net sales. Under the new presentation,  revenues
are reported on a gross  basis,  that is core  returns  from  customers  are not
deducted in order to reach net sales,  but rather are  included in cost of goods
sold.  The nine and  three  month  periods  ended  December  31,  1995 have been
restated to reflect this new  presentation.  The Company  believes that this new
presentation  provides a truer depiction of actual sales and cost of goods sold.
In addition, it reflects a more proper relationship between sales and inventory.

          Net  sales for the nine  months  ended  December  31,  1996  increased
$17,273,000 or 38.4%, from $44,990,000 to $62,263,000 over the nine months ended
December  31,  1995.  Net sales for the three  months  ended  December  31, 1996
increased  $4,862,000 or 27.5%,  from  $17,661,000 to $22,523,000 over the three
months ended  December 31, 1995. The increases are  attributable  to the general
growth of business with existing  customers,  including the occurrence of update
orders with  certain  customers,  which  increase  the number of SKUs that these
customers  offer in their  stores.  In addition,  the Company  believes that the
continued  aging of the import  vehicle fleet also  contributed to its increased
sales.  The Company also  continued the expansion of its product line to include
remanufactured alternators and starters for domestic car and light trucks, which
generated net sales of approximately $750,000 for the nine months ended December
31, 1996. The number of units


                                      -8-


<PAGE>



shipped to all customers  was  approximately  1,029,000  units during the recent
nine-month period and approximately  758,000 units during the same period a year
earlier, representing an increase of approximately 35.8%.

          Cost of  goods  sold for the  nine  months  ended  December  31,  1996
increased  $14,043,000 or 39.3%, from $35,694,000 to $49,737,000,  over the nine
months ended  December  31, 1995.  Cost of goods sold for the three months ended
December  31,  1996  increased   $3,932,000  or  28.1%,   from   $13,975,000  to
$17,907,000,  over the three months ended  December 31, 1995.  The increases are
primarily   attributable  to  additional  costs  in  connection  with  increased
production.  Cost of goods sold as a percentage of net sales  increased over the
nine-month  periods  from 79.3% to 79.9% and over the  three-month  periods from
79.1% to 79.5%.  While the  increases in cost of goods sold are minimal over the
periods,  they can be primarily  attributed  to the pricing  pressures  that the
Company  experienced  during the first four months of calendar 1996 as offset by
the continuing lowering of manufacturing costs by the Company.

          Selling expenses for the nine months ended December 31, 1996 increased
$258,000 or 17.6%,  from  $1,467,000 to  $1,725,000,  over the nine months ended
December 31, 1995. Selling expenses for the three months ended December 31, 1996
increased  $82,000 or 13.9%,  from  $592,000 to $674,000  over the three  months
ended December 31, 1995. Selling expenses as a percentage of net sales decreased
to 2.8% for the nine  months  ended  December  31,  1996  from 3.3% for the same
period a year earlier and 3.0% for the three months ended December 31, 1996 from
3.4% for the same period one year earlier.  These decreases in selling  expenses
as a percentage of net sales  represent the continued  leveraging of these costs
over the  Company's  increased net sales.  The increases in selling  expenses in
general are attributable to increased advertising  allowances given to customers
as well as increased payroll relating to the Company's sales department.

          General and administrative expenses for the nine months ended December
31, 1996 increased $381,000 or 11.7% from $3,251,000 to $3,632,000 over the nine
months ended December 31, 1995.  General and  administrative  expenses  remained
approximately  the same at  $1,257,000  for the three months ended  December 31,
1996  and  $1,249,000  for the  three  months  ended  December  31,  1995.  As a
percentage of net sales these expenses  decreased  over the  nine-month  periods
from 7.2% to 5.8% and over the  three-month  periods  from  7.1% to 5.6%.  These
decreases  represent the continued  leveraging of these costs over the Company's
increased net sales.  Approximately  65.6% of the increase  over the  nine-month
periods was the result of costs  incurred  under the Company's  incentive  bonus
plan  adopted  in  August  1995.  The  balance  of the  increase  was  primarily
attributable to increased insurance coverages and professional fees.

          Interest  expense net of  interest  income was  $752,000  for the nine
months ended  December 31, 1996 and $287,000 for the three months ended December
31, 1996. This represents an increase of $100,000 or 15.3% and $93,000 or 47.9%,
respectively,  over the comparable  periods a year earlier.  Interest expense is
comprised  principally  of  interest  paid  on the  Company's  revolving  credit
facility. The balance of interest expense is from loans on the Company's capital
leases.  Interest income of $175,000 for the nine months ended December 31, 1996
and $43,000 for the three months



                                      -9-

<PAGE>



ended  December  31,  1996 was derived  from  investments  principally  from the
Company's second public offering in November 1995.


Liquidity and Capital Resources
- -------------------------------

          The Company's operations have been financed principally from cash flow
from  operations,  the net proceeds of the Company's  public  offerings in March
1994 and November 1995 and borrowings under a revolving  credit facility.  As of
December 31, 1996, the Company's working capital was $47,508,000.

          Net cash used in operating  activities during the first nine months of
fiscal 1997 and 1996 was $6,575,000 and $9,762,000,  respectively.  The increase
was  primarily  due to an increase  in accounts  receivable  of  $5,622,000,  an
increase in  inventory  of  $6,429,000  and an  offsetting  increase in accounts
payable and accrued expenses of $1,282,000.  The increase in accounts receivable
is primarily  attributable to the increased sales of the Company during the nine
months  ended  December  31,  1996.  The  increase in  inventory  was  primarily
attributable  to the addition of  approximately  $5,300,000 of inventory for the
Company's recent entry into the business of remanufacturing domestic alternators
and starters.  Growth in inventory for this new business is expected to continue
for the foreseeable future. In connection with the Company's expansion into this
business,  the Company has secured a lease for an additional 160,000 square foot
production  and  warehouse  facility  effective  April 1, 1997  located near its
existing facility in Torrance, California.

          Net cash  provided by (and used in)  investing  activities  during the
nine months ended December 31, 1996 and 1995 was  $5,856,000  and  ($7,625,000),
respectively.  During the nine months  ended  December 31, 1996 the Company used
$6,908,000 of  investments  to fund its operating and financing  activities  and
spent $1,052,000 in connection with the purchase of new plant and equipment.

          Net  cash  provided  by  financing   activities   was  $1,663,000  and
$19,573,000  for the first nine  months of fiscal  1997 and 1996,  respectively.
During the nine months ended  December 31, 1996, the Company  realized  $351,000
from the proceeds of exercised  stock options and  increased  its  borrowings by
$1,788,000.

          The Company has a credit  agreement  expiring in 1998 with Wells Fargo
Bank,  National  Association  (the "Bank") that provides for a revolving  credit
facility in an aggregate  principal  amount  recently  increased to a maximum of
$25,000,000,  which credit facility is secured by a lien on substantially all of
the assets of the Company.  The credit facility provides for an interest rate on
borrowings at the lower of the Bank's prime rate less .25% and LIBOR plus 1.65%.
Under the terms of the  credit  facility  and  included  in the  maximum  amount
thereunder,  the Bank will issue letters of credit and banker's  acceptances for
the account of the Company in an aggregate amount not exceeding  $2,500,000.  At
February  9,  1997,  the   outstanding   balance  on  the  credit  facility  was
approximately $17,300,000.



                                      -10-

<PAGE>



          The  Company's  accounts  receivable  as  of  December  31,  1996  was
$22,886,000.  This represents an increase of $5,622,000 over accounts receivable
on March 31, 1996.  There are times when the Company extends payments terms with
certain  customers  in order to help them  finance an  increase in the number of
SKUs  carried by that  customer  and for other  purposes.  The  Company  insures
collection  of certain of its accounts  receivable  through an insurance  policy
with an  independent  credit  company  at an  annual  premium  of  approximately
$70,000.  The  Company's  policy  generally  has  been to  issue  credit  to new
customers  only after they have been included under the coverage of its accounts
receivable insurance policy.

          The Company's  inventory as of December 31, 1996 was  $34,980,000,  an
increase  of  $3,681,000  or 11.8% over  September  30,  1996 and an increase of
$6,429,000 or 22.5% over March 31, 1996.  The increase  includes the addition of
approximately  $5,300,000 of inventory  predominantly over the last three months
for the  Company's  recent entry into the business of  remanufacturing  domestic
alternators and starters and, to a lesser extent,  the Company's addition of new
SKUs to its product  line thus  increasing  the  quantity of cores and  finished
goods needed to supply its customers.



                                      -11-

<PAGE>




 
                          PART II - OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

          (a)     Exhibits:

                  10.4              Credit Agreement,  dated as of June 1, 1996,
                                    by and  between  the Company and Wells Fargo
                                    Bank,  National  Association 

                  10.5              Revolving  Line of Credit Note,  dated as of
                                    November 1, 1996, by and between the Company
                                    and Wells Fargo Bank, National Association

                  10.17             Amendment to Lease,  dated  October 3, 1996,
                                    by and between Golkar Enterprises,  Ltd. and
                                    the Company relating to additional  property
                                    in Torrance, California.

                  27.1              Financial Data Schedule.

          (b)     Reports on Form 8-K

                  The  Company  has not filed any reports on Form 8-K during the
quarterly period ended December 31, 1996.


                                      -12-


<PAGE>




                                   SIGNATURES
                                   ----------


          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.


                                          MOTORCAR PARTS & ACCESSORIES, INC.


Dated:    February 13, 1997          By:  /s/ Peter Bromberg
                                          ----------------------------------
                                              Peter Bromberg
                                              Chief Financial Officer



                                      -13-

<PAGE>



                                  EXHIBIT INDEX
                                  -------------


Exhibit
Number                    Description                                Page Number
- ------                    -----------                                -----------

10.4            Credit Agreement, dated as of June 1, 1996,                15
                by and between the Company and Wells Fargo
                Bank, National Association

10.5            Revolving Line of Credit Note, dated as of                 33
                November 1, 1996, by and between the Company
                and Wells Fargo Bank, National Association

10.17           Amendment to Lease, dated October 3,                       40
                1996, by and between Golkar Enterprises,
                Ltd. and the Company relating to additional
                property in Torrance, California.

27.1            Financial Data Schedule                                    47

                                      -14-






                                                                    Exhibit 10.4
                                                                    ------------

                                CREDIT AGREEMENT


         THIS  AGREEMENT  is  entered  into as of June 1, 1996,  by and  between
MOTORCAR PARTS & ACCESSORIES,  INC., a New York  corporation  ("Borrower"),  and
WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").


                                     RECITAL
                                     -------

         Borrower has  requested  from Bank the credit  accommodation  described
below,  and Bank has agreed to provide said credit  accommodation to Borrower on
the terms and conditions contained herein.

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Bank and Borrower hereby agree as follows:


                                    ARTICLE I
                                    ---------
                                   THE CREDIT
                                   ----------

         SECTION 1.1       LINE OF CREDIT.

         (a)  Line of  Credit.  Subject  to the  terms  and  conditions  of this
              ---------------
Agreement,  Bank hereby agrees to make advances to Borrower from time to time up
to and including June 1, 1998, not to exceed at any time the aggregate principal
amount of Fifteen  Million  Dollars  ($15,000,000.00)  ("Line of  Credit"),  the
proceeds of which shall be used for  Borrower's  working  capital  requirements.
Borrower's  obligation  to repay  advances  under  the Line of  Credit  shall be
evidenced by a promissory note  substantially  in the form of Exhibit A attached
hereto ("Line of Credit Note"),  all terms of which are  incorporated  herein by
this reference.

         (b)  Letter
 of Credit  Subfeature.  As a  subfeature  under the Line of
              ----------------------------
Credit,  Bank agrees from time to time during the term  thereof,  to issue sight
commercial and usance  commercial  letters of credit for the account of Borrower
and in  favor  of  beneficiaries  acceptable  to  Bank to  finance  transactions
acceptable  to Bank (each,  a "Letter of Credit" and  collectively,  "Letters of
Credit"); provided however, that the form and substance of each Letter of Credit
shall be subject to  approval  by Bank,  in its sole  discretion;  and  provided
further,  that the aggregate undrawn amount of all outstanding Letters of Credit
plus the  aggregate  amount of all  outstanding  drafts  accepted  by Bank under
usance Letters of Credit plus the aggregate amount of all Acceptances  shall not
at any time exceed Two Million Five Hundred  Thousand  Dollars  ($2,500,000.00).
Each Letter of Credit shall be issued for a term not to exceed ninety (90) days,
as designated by Borrower; provided however, that no Letter of Credit shall have
an expiration date subsequent to



<PAGE>



September 1, 1998. The undrawn amount of all Letters of Credit shall be reserved
under the Line of Credit and shall not be  available  for  advances  thereunder.
Each Letter of Credit shall be subject to the additional terms and conditions of
the Letter of Credit Agreement and related  documents,  if any, required by Bank
in connection  with the issuance  thereof (each, a "Letter of Credit  Agreement"
and collectively,  "Letter of Credit Agreements"). Each draft paid by Bank under
a Letter of Credit shall be deemed an advance under the Line of Credit and shall
be repaid by  Borrower  in  accordance  with the  terms and  conditions  of this
Agreement  applicable to such advances;  provided  however,  that if the Line of
Credit is not  available,  for any reason  whatsoever,  at the time any draft is
paid by Bank, or if advances are not available  under the Line of Credit at such
time due to any limitation on borrowings set forth herein,  then the full amount
of such draft shall be  immediately  due and  payable,  together  with  interest
thereon,  from the date such  amount is paid by Bank to the date such  amount is
fully repaid by Borrower,  at the rate of interest  applicable to advances under
the Line of Credit.  In such event,  Borrower  agrees that Bank,  at Bank's sole
discretion,  may debit any demand  deposit  account  maintained by Borrower with
Bank for the full  amount  of any such  draft.  Notwithstanding  the  foregoing,
usance  commercial  Letters  of  Credit  shall be  issued  only to  finance  the
importation of goods into the United States,  and shall contain such  provisions
and be issued in such  manner as to satisfy  Bank that any  banker's  acceptance
created  by  Bank's  acceptance  of a draft  thereunder  shall be  eligible  for
discount  by a Federal  Reserve  Bank,  will not result in a  liability  of Bank
subject to reserve  requirements  under any law,  Regulation  or  administrative
order, and will not cause Bank to violate any lending limit imposed upon Bank by
any law, regulation or administrative order. Usance commercial Letters of Credit
shall provide for drafts thereunder with terms which do not exceed the lesser of
ninety  (90)  days or such  other  period  of time as may be  necessary  for the
acceptance  created  thereunder to be eligible for discount and otherwise comply
with this  Agreement;  provided  however,  that no usance  commercial  Letter of
Credit shall  provide for drafts with a term which ends  subsequent to September
1,  1998.  The  amount of each  matured  bankers'  acceptance  created by Bank's
acceptance of a draft under a usance commercial Letter of Credit shall be deemed
an  advance  under  the Line of  Credit  and  shall be  repaid  by  Borrower  in
accordance  with the terms and conditions of this  Agreement  applicable to such
advances; provided however, that if the Line of Credit is not available, for any
reason whatsoever,  at the time any such acceptance  matures, or if advances are
not  available  under the Line of Credit at such time due to any  limitation  on
borrowings  set forth herein,  then Borrower shall  immediately  pay to Bank the
full amount of such matured acceptance,  together with interest thereon from the
date such acceptance  matures to the date such amount is fully paid by Borrower,
at the rate of interest applicable to advances under the Line of Credit. In such
event,  Borrower  agrees  that Bank,  at Bank's sole  discretion,  may debit any
demand deposit  account  maintained by Borrower with Bank for the full amount of
any such acceptance.

         (c) Acceptance  Subfeature.  As a subfeature  under the Line of Credit,
             ----------------------
Bank  agrees  to  create  banker's   acceptances  (each  an  "Acceptance",   and
collectively,  "Acceptances")  for the account of Borrower by  accepting  drafts
drawn on Bank by  Borrower  from time to time  during the term  thereof,  and by
accepting time drafts presented under usance commercial Letters of Credit issued
by Bank  for  the  account  of  Borrower,  for  the  purpose  of  financing  the
importation

                                       -2-


<PAGE>



of goods into the United States;  provided however,  that the form and substance
of each Acceptance shall be subject to approval by Bank, in its sole discretion;
and provided further,  that the aggregate amount of all outstanding  Acceptances
plus the aggregate undrawn amount of all outstanding  Letters of Credit plus the
aggregate amount of all outstanding drafts accepted by Bank under usance Letters
of Credit shall not at any time exceed Two Million Five Hundred Thousand Dollars
($2,500,000.00).  Each Acceptance  created by Bank's acceptance of a draft drawn
on Bank by Borrower shall be in the minimum amount of Two Hundred Fifty Thousand
Dollars ($250,000.00).  Each Acceptance shall be subject to the additional terms
and conditions of an Acceptance Agreement in form and substance  satisfactory to
Bank ("Acceptance  Agreement").  Each Acceptance shall be granted for a term not
to exceed the lesser of ninety (90) days,  as  designated  by Borrower,  or such
period of time as may be  necessary  to comply  with the  Acceptance  Agreement;
provided however, that no Acceptance shall have an expiration date subsequent to
September 1, 1998. The outstanding  amount of all Acceptances  shall be reserved
under the Line of Credit and shall not be available for advances thereunder. The
amount of each  Acceptance  which  matures  shall be deemed an advance under the
Line of Credit and shall be repaid by Borrower in accordance  with the terms and
conditions of this Agreement applicable to such advances; provided however, that
if the Line of Credit is not available,  for any reason whatsoever,  at the time
any  Acceptance  matures,  or if advances  are not  available  under the Line of
Credit at such time due to any limitation on borrowings  set forth herein,  then
Borrower  shall  immediately  pay to  Bank  the  full  amount  of  such  matured
Acceptance, together with interest thereon from the date such Acceptance matures
to the date  such  amount is fully  paid by  Borrower,  at the rate of  interest
applicable to advances under the Line of Credit. In such event,  Borrower agrees
that Bank,  at Bank's  sole  discretion,  may debit any demand  deposit  account
maintained by Borrower with Bank for the full amount of any such Acceptance. All
Acceptances  created  hereunder by Bank's  acceptance of drafts drawn on Bank by
Borrower shall be discounted with Bank. Bank shall not be obligated hereunder to
discount Acceptances created by Bank's acceptance of time drafts presented under
usance commercial Letters of Credit.

         (d)      Foreign Exchange Subfeature.
                  ---------------------------

                  (i) Foreign Exchange Facility.  As a subfeature under the Line
                      -------------------------
of Credit and subject to the terms and conditions of this Agreement, Bank hereby
agrees  to  make  available  to  Borrower  a  facility  (the  "Foreign  Exchange
Facility")  under which Bank,  from time to time during the term  thereof,  will
enter into  foreign  exchange  contracts  for the  account of  Borrower  for the
purchase and/or sale by Borrower in United States dollars of foreign  currencies
designated by Borrower; provided however, that the maximum outstanding principal
balance of all such foreign  exchange  contracts shall not exceed at any time an
aggregate of Five Million  United States Dollars  (US$5,000,000.00).  No foreign
exchange  contract  shall be executed for a term in excess of twelve (12) months
or for a term  which  extends  beyond  June  30,  1998.  Borrower  shall  have a
"Delivery Limit" under the Foreign  Exchange  Facility not to exceed at any time
the aggregate principal amount of One Million Dollars  (US$1,000,000.00),  which
Delivery  Limit  reflects the maximum  principal  amount of  Borrower's  foreign
exchange  contracts which may mature during any one (1) day period.  All foreign
exchange transactions shall be subject to the additional terms

                                       -3-


<PAGE>



of Foreign Exchange  Agreement  between Borrower and Bank,  substantially in the
form of Exhibit B attached hereto ("Foreign Exchange  Agreement"),  all terms of
which are incorporated  herein by reference.  The aggregate  principal amount of
foreign exchange  contracts maturing on each day shall be available for advances
or other extensions of credit thereunder.

                  (ii) Settlement.  Bank shall,  and Borrower hereby  authorizes
                       ----------
Bank to, settle each foreign  exchange  contract  entered into by Bank under the
Foreign  Exchange  Facility on its maturity  date, at Bank's  election,  by Bank
either (A) debiting any demand deposit account  maintained by Borrower with Bank
for the full amount of such settlement,  or (B) making an advance under the Line
of Credit in an amount of such settlement.

         (e) Borrowing and Repayment.  Borrower may from time to time during the
             -----------------------
term of the Line of Credit  borrow,  partially or wholly  repay its  outstanding
borrowings,  and  reborrow,  subject  to  all  of  the  limitations,  terms  and
conditions  contained  herein or in the Line of Credit Note;  provided  however,
that the total outstanding  borrowings under the Line of Credit shall not at any
time exceed the maximum  principal  amount  available  thereunder,  as set forth
above.

         SECTION 1.2       INTEREST/FEES.

         (a) Interest.  The outstanding  principal balance of the Line of Credit
             --------
shall  bear  interest  at the rate of  interest  set forth in the Line of Credit
Note.

         (b) Computation and Payment. Interest shall be computed on the basis of
             -----------------------
a 360-day year, actual days elapsed.  Interest shall be payable at the times and
place set forth in the Line of Credit Note.

         (c) Commitment  Fee.  Borrower  shall  pay to  Bank  a   non-refundable
             ---------------
commitment fee for the Line of Credit equal to $5,000.00, which fee shall be due
and payable in full upon execution of this Agreement.

         (d) Unused  Commitment  Fee.  Borrower shall pay to Bank a fee equal to
             -----------------------
one-quarter  percent (0.25%) per annum (computed on the basis of a 360-day year,
actual days  elapsed) on the average  daily unused amount of the Line of Credit,
which fee shall be  calculated  on an annual  basis by Bank and shall be due and
payable by Borrower in arrears  within five (5) days after each  billing is sent
by Bank.

         (e) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the
             ---------------------
issuance of each Letter of Credit  equal to the  greater of  one-eighth  percent
(1/8%) of the face  amount  thereof or  $100.00,  (ii) fees upon the  payment or
negotiation  by Bank of each  draft  under any  Letter  of  Credit  equal to the
greater of  one-quarter  percent  (1/4%) of the amount of such draft or $100.00,
(iii) fees upon any  amendment  to any Letter of Credit  equal to the greater of
one -eighth  percent (1/8%) of the amount thereof or $80.00,  and (iv) fees upon
the  occurrence  of any other  activity  with  respect  to any  Letter of Credit
(including without limitation, the transfer, or cancellation of

                                       -4-


<PAGE>



any Letter of Credit)  determined  in accordance  with Bank's  standard fees and
charges then in effect for such activity.

         (f) Acceptance  Fees. For any  Acceptance  created  hereunder by Bank's
             ----------------
acceptance of a draft drawn on Bank by Borrower,  Borrower  shall pay to Bank an
acceptance  fee for each such  Acceptance,  payable  on the date it is  created,
equal to the greater of $250.00,  or an amount determined by dividing by 360 the
product of (i) the sum of two  percent  (2%) plus a  percentage  equal to Bank's
Discount Rate in effect at the time of such Acceptance is created, (ii) the face
amount of such Acceptance,  and (iii) the term of such  Acceptance,  in days. As
used  herein,  the term  "Discount  Rate"  shall  mean at any time the rate most
recently  determined  by Bank as its  discount  rate for buying  prime  eligible
acceptances  in an amount equal to each  Acceptance and with a term equal to the
term of each  Acceptance,  with  the  understanding  that the  Discount  Rate is
evidenced by the recording thereof in such internal  publication or publications
as  Bank  may  designate.  Each  change  in  the  Discount  Rate  applicable  to
Acceptances  hereunder  shall become  effective on the date each  Discount  Rate
change is determined by Bank. In discounting any Acceptance, Bank may deduct the
amount of the fee from Bank's payment of the amount thereof.  For any Acceptance
created  hereunder  by Bank's  acceptance  of a draft  presented  under a usance
commercial  Letter of Credit,  Borrower  shall pay to Bank,  in addition to such
processing  and other fees as may be due to Bank in connection  with such Letter
of Credit, an acceptance fee for each such Acceptance, payable on the date it is
created,  in an amount  determined  by  dividing  by 360 the  product of (A) two
percent (2%), (B) the face amount of such  Acceptance,  and (C) the term of such
Acceptance,  in days.  Bank shall have no obligation to repay all or any portion
of any Acceptance fee payable hereunder in the event an acceptance is paid prior
to maturity, by acceleration or otherwise.

         SECTION 1.3       COLLECTION OF PAYMENTS.  Borrower  authorizes Bank to
collect  interest  and fees due under the Line of Credit by charging  Borrower's
demand deposit account number ___________ with Bank, or any other demand deposit
account  maintained by Borrower with Bank, for the full amount  thereof.  Should
there be  insufficient  funds in any such demand deposit account to pay all such
sums when due, the full amount of such  deficiency  shall be immediately due and
payable by Borrower.

         SECTION 1.4       COLLATERAL.

         As security for all  indebtedness of Borrower to Bank,  Borrower hereby
grants to Bank security  interests of first priority in all Borrower's  accounts
receivable  and other  rights to payment,  general  intangibles,  inventory  and
equipment.  All of the foregoing  shall be evidenced by and subject to the terms
of such  security  agreements,  financing  statements,  deeds of trust and other
documents  as  Bank  shall  reasonably  require,   all  in  form  and  substance
satisfactory to Bank.  Borrower shall reimburse Bank immediately upon demand for
all costs and expenses  incurred by Bank in connection with any of the foregoing
security,  including without limitation,  filing and recording fees and costs of
appraisals, audits and title insurance.


                                       -5-


<PAGE>



                                   ARTICLE II
                                   ----------
                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

         Borrower  makes the following  representations  and warranties to Bank,
which  representations  and  warranties  shall  survive  the  execution  of this
Agreement  and shall  continue in full force and effect until the full and final
payment, and satisfaction and discharge,  of all obligations of Borrower to Bank
subject to this Agreement.

         SECTION 2.1     LEGAL STATUS. Borrower is a corporation, duly organized
and existing and in good standing  under the laws of the State of New York,  and
is  qualified or licensed to do business  (and is in good  standing as a foreign
corporation,  if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

         SECTION 2.2     AUTHORIZATION AND VALIDITY. This Agreement, the Line of
Credit Note, the Letter of Credit Agreements, the Foreign Exchange Agreement and
each other  document,  contract and  instrument  required  hereby or at any time
hereafter  delivered to Bank in  connection  herewith  (collectively,  the "Loan
Documents") have been duly authorized,  and upon their execution and delivery in
accordance with the provisions hereof will constitute  legal,  valid and binding
agreements  and  obligations  of Borrower or the party which  executes the same,
enforceable in accordance with their respective terms.

         SECTION 2.3     NO VIOLATION.  The execution,  delivery and performance
by Borrower of each of the Loan  Documents  do not violate any  provision of any
law or regulation,  or contravene any provision of the Articles of Incorporation
or  By-Laws  of  Borrower,  or result  in any  breach  of or  default  under any
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.

         SECTION 2.4     LITIGATION.  There  are no  pending,  or to the best of
Borrower's  knowledge  threatened,  actions,  claims,  investigations,  suits or
proceedings  by or  before  any  governmental  authority,  arbitrator,  court or
administrative  agency  which  could  have  a  material  adverse  effect  on the
financial  condition  or  operation  of Borrower  other than those  disclosed by
Borrower to Bank in writing prior to the date hereof.

         SECTION 2.5     CORRECTNESS  OF  FINANCIAL  STATEMENT.  The   financial
statement  of Borrower  dated  December  31, 1995, a true copy of which has been
delivered  by Borrower  to Bank prior to the date  hereof,  (a) is complete  and
correct and presents fairly the financial  condition of Borrower,  (b) discloses
all  liabilities  of  Borrower  that are  required to be  reflected  or reserved
against under generally accepted  accounting  principles,  whether liquidated or
unliquidated,  fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied. Since the date of
such  financial  statement  there  has been no  material  adverse  change in the
financial condition of Borrower, nor has Borrower

                                       -6-


<PAGE>



mortgaged,  pledged,  granted a security interest in or otherwise encumbered any
of its assets or properties except in favor of Bank or as otherwise permitted by
Bank in writing.

         SECTION 2.6     INCOME  TAX  RETURNS.  Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to any
year.

         SECTION 2.7     NO  SUBORDINATION.  There is no  agreement,  indenture,
contract or instrument to which  Borrower is a party or by which Borrower may be
bound that requires the  subordination  in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.

         SECTION 2.8     PERMITS,  FRANCHISES.  Borrower  possesses,  and   will
hereafter  possess,  all permits,  franchise and licenses required and rights to
all trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance  with
applicable law.

         SECTION 2.9     ERISA.  Borrower  is  in  compliance  in  all  material
respects  with all  applicable  provisions  of the  Employee  Retirement  Income
Security  Act of 1974,  as amended or  recodified  from time to time  ("ERISA");
Borrower has not violated any provision of any defined  employee pension benefit
plan (as defined in ERISA)  maintained or  contributed  to by Borrower  (each, a
"Plan");  no Reportable Event as defined in ERISA has occurred and is continuing
with respect to any Plan  initiated  by  Borrower;  Borrower has met its minimum
funding  requirements  under ERISA with respect to each Plan; and each Plan will
be able to fulfill its benefit  obligations as they come due in accordance  with
the Plan documents and under generally accepted accounting principles.

         SECTION 2.10    OTHER  OBLIGATIONS.  Borrower  is not in default on any
obligation  for borrowed  money,  any  purchase  money  obligation  or any other
material lease, commitment, contract, instrument or obligation.

         SECTION 2.11    ENVIRONMENTAL  MATTERS. Except as disclosed by Borrower
to Bank in writing  prior to the date hereof,  Borrower is in  compliance in all
material respects with all applicable Federal or state environmental,  hazardous
waste, health and safety statutes, and any rules or regulations adopted pursuant
thereto,  which govern or affect any of Borrower's operations and/or properties,
including  without  limitation,   the  Comprehensive   Environmental   Response,
Compensation   and  Liability  Act  of  1980,   the  Superfund   Amendments  and
Reauthorization Act of 1986, the Federal Resource  Conservation and Recovery Act
of 1976, the Federal Toxic Substances  Control Act and the California Health and
Safety Code, as any of the same may be amended,  modified or  supplemented  from
time to time.  None of the  operations of Borrower is the subject of any Federal
or state  investigation  evaluating  whether  any  remedial  action  involving a
material expenditure is needed to respond to a release of any toxic or hazardous
waste or substance  into the  environment.  Borrower has no material  contingent
liability  in  connection  with any release of any toxic or  hazardous  waste or
substance into the environment.

                                       -7-


<PAGE>





                                   ARTICLE III
                                   -----------
                                   CONDITIONS
                                   ----------

         SECTION 3.1    CONDITIONS  OF  INITIAL   EXTENSION   OF   CREDIT.   The
obligation  of Bank to extend  any  credit  contemplated  by this  Agreement  is
subject  to the  fulfillment  to  Bank's  satisfaction  of all of the  following
conditions:

         (a)      Approval of Bank Counsel.  All legal matters incidental to the
                  ------------------------
extension of credit by Bank shall be satisfactory to Bank's counsel.

         (b)      Documentation. Bank shall have received, in form and substance
                  -------------
satisfactory to Bank, each of the following, duly executed:

                  (i)      This Agreement and the Line of Credit Note.
                  (ii)     Corporate Borrowing Resolution.
                  (iii)    Certificate of Incumbency.
                  (iv)     Articles of Incorporation.
                  (v)      Security Agreements covering all collateral described
                           in Section 1.4. hereof.
                  (vi)     UCC-1  Financing  Statements  covering all collateral
                           described in Section 1.4. hereof.
                  (vii)    Continuing Commercial Letter of Credit Agreement.
                  (viii)   Acceptance Agreement.
                  (ix)     Foreign Exchange Agreement.
                  (x)      Such other  documents  as Bank may require  under any
                           other Section of this Agreement.

         (c)  Financial  Condition.  There shall have been no  material  adverse
              --------------------
change,  as  determined  by Bank,  in the  financial  condition  or  business of
Borrower,  nor any material decline,  as determined by Bank, in the market value
of any collateral required hereunder or a substantial or material portion of the
assets of Borrower.

         (d)  Insurance.  Borrower  shall have  delivered  to Bank  evidence  of
              ---------
insurance  coverage on all Borrower's  property,  in form,  substance,  amounts,
covering risks and issued by companies  satisfactory to Bank, and where required
by Bank, with loss payable endorsements in favor of Bank.

         SECTION 3.2   CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of
Bank to make each extension of credit  requested by Borrower  hereunder shall be
subject  to the  fulfillment  to Bank's  satisfaction  of each of the  following
conditions:


                                       -8-


<PAGE>



         (a) Compliance. The representations and warranties contained herein and
             ----------
in each of the other Loan  Documents  shall be true on and as of the date of the
signing of this  Agreement  and on the date of each  extension of credit by Bank
pursuant  hereto,  with the same  effect  as  though  such  representations  and
warranties  had been made on and as of each such date, and on each such date, no
Event of Default as defined  herein,  and no condition,  event or act which with
the giving of' notice or the  passage of time or both would  constitute  such an
Event of Default, shall have occurred and be continuing or shall exist.

         (b)  Documentation.  Bank shall have received all additional  documents
              -------------
which may be required in connection with such extension of credit.


                                   ARTICLE IV
                                   ----------
                              AFFIRMATIVE COVENANTS
                              ---------------------

         Borrower  covenants  that so long as Bank  remains  committed to extend
credit to  Borrower  pursuant  hereto,  or any  liabilities  (whether  direct or
contingent,  liquidated  or  unliquidated)  of Borrower to Bank under any of the
Loan Documents remain outstanding,  and until payment in full of all obligations
of Borrower subject hereto,  Borrower shall,  unless Bank otherwise  consents in
writing:

         SECTION 4.1     PUNCTUAL   PAYMENTS.   Punctually  pay  all  principal,
interest,  fees or other  liabilities due under any of the Loan Documents at the
times and place and in the manner specified therein.

         SECTION 4.2     ACCOUNTING RECORDS. Maintain adequate books and records
in  accordance  with  generally  accepted  accounting  principles   consistently
applied,  and permit any  representative  of Bank,  at any  reasonable  time, to
inspect,  audit and examine such books and records,  to make copies of the same,
and to inspect the properties of Borrower.

         SECTION 4.3     FINANCIAL  STATEMENTS.  Provide  to  Bank  all  of  the
following, in form and detail satisfactory to Bank:

         (a)   not  later  than 90 days  after and as of the end of each  fiscal
year, an unqualified  audited  financial  statement of Borrower,  prepared by an
independent  certified public accountant  acceptable to Bank, to include balance
sheet, income statement and statement of cash flow, together with all supporting
schedules and footnotes;

         (b)   not later  than 45 days  after  and as of the end of each  fiscal
quarter,  a  financial  statement  as  included  in form 10Q as  filed  with the
Securities and Exchange  Commission,  prepared by Borrower,  to include  balance
sheet  and  income  statement,   together  with  all  supporting  schedules  and
footnotes, if any, included therein;


                                       -9-


<PAGE>



         (c)   not  later  than 45 days after  and as of the end of each  fiscal
quarter,  an aged listing of accounts  receivable  and accounts  payable,  and a
reconciliation of accounts;

         (d)   contemporaneously   with  each  annual  and  quarterly  financial
statement of Borrower  required  hereby, a certificate of the president or chief
financial officer of Borrower that the financial  statements  delivered pursuant
thereto  are  accurate  and  that  there  exists  no Event  of  Default  nor any
condition,  act or event  which with the giving of notice or the passage of time
or both  would  constitute  an Event of  Default,  substantially  in the form of
Exhibit C attached hereto;

         (e)   from time to time such other  information  as Bank may reasonably
request.

         SECTION 4.4    COMPLIANCE. Preserve and maintain all licenses, permits,
governmental  approvals,  rights,  privileges and  franchises  necessary for the
conduct  of its  business;  and  comply  with the  provisions  of all  documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws,  rules,  regulations and orders
of any governmental authority applicable to Borrower and/or its business.

         SECTION 4.5    INSURANCE.  Maintain and keep in force  insurance of the
types and in amounts customarily carried in lines of business similar to that of
Borrower,   including  but  not  limited  to  fire,  extended  coverage,  public
liability,  flood,  property  damage and  workers'  compensation,  with all such
insurance  carried  with  companies  and in amounts  satisfactory  to Bank,  and
deliver to Bank from time to time at Bank's request  schedules setting forth all
insurance then in effect.

         SECTION 4.6    FACILITIES.  Keep all properties  useful or necessary to
Borrower's  business  in good repair and  condition,  and from time to time make
necessary  repairs,  renewals and  replacements  thereto so that such properties
shall be fully and efficiently preserved and maintained.

         SECTION 4.7    TAXES AND OTHER LIABILITIES.  Pay and discharge when due
any and all  indebtedness,  obligations,  assessments  and  taxes,  both real or
personal,  including without limitation Federal and state income taxes and state
and local  property  taxes and  assessments,  except such (a) as Borrower may in
good faith  contest or as to which a bona fide  dispute  may arise,  and (b) for
which Borrower has made provision, to Bank's satisfaction,  for eventual payment
thereof in the event Borrower is obligated to make such payment.

         SECTION 4.8    LITIGATION.  Promptly give notice in  writing to Bank of
any litigation  pending or threatened against Borrower with a claim in excess of
$100,000.00.

         SECTION 4.9    FINANCIAL  CONDITION.   Maintain   Borrower's  financial
condition as follows using generally accepted accounting principles consistently
applied  and used  consistently  with  prior  practices  (except  to the  extent
modified by the definitions herein):


                                      -10-


<PAGE>



         (a)   Tangible  Net  Worth   initially   not  at  any  time  less  than
$34,000,000.00,  with said minimum to increase as of each September 30 and March
31,  commencing  September 30, 1996, by an amount equal to 50% of Borrower's net
income  after  taxes for the  immediately  preceding  six (6)  months,  and with
"Tangible Net Worth" defined as the aggregate of total stockholders' equity plus
subordinated debt less any intangible assets.

         (b)   Total  Liabilities  divided by Tangible Net Worth not at any time
greater than 1.0 to 1.0,  with "Total  Liabilities"  defined as the aggregate of
current liabilities and non-current liabilities less subordinated debt, and with
"Tangible Net Worth" as defined above.

         (c)   Quick  Ratio not at any time less  than .70 to 1.0,  with  "Quick
Ratio" defined as the aggregate of unrestricted  cash,  unrestricted  marketable
securities  and  accounts  receivable  convertible  into cash  divided  by total
current  liabilities  (to include all outstanding  borrowings  under the Line of
Credit).

         (d)   Net income after taxes not less than  $1,000,000.00  on an annual
basis,  determined as of each fiscal year end, and pre-tax  profit not less than
$1.00 on a quarterly basis, determined as of each fiscal quarter end.

         SECTION  4.10    NOTICE TO BANK.  Promptly  (but in  no event more than
five (5) Business Days after the  occurrences of each such event or matter) give
written notice to Bank in reasonable  detail of: (a) the occurrence of any Event
of Default,  or any  condition,  event or act which with the giving of notice or
the passage of time or both would constitute an Event of Default; (b) any change
in the name or the organizational. structure of Borrower; (c) the occurrence and
nature of any  Reportable  Event or Prohibited  Transaction,  each as defined in
ERISA,  or any  funding  deficiency  with  respect  to  any  Plan;  or  (d)  any
termination or cancellation  of any insurance  policy which Borrower is required
to maintain,  or any uninsured or partially  uninsured loss through liability or
property damage, or through fire, theft or any other cause affecting  Borrower's
property in excess of an aggregate  of  $100,000.00.  As used  herein,  the term
"Business  Day" shall mean any day other  than a  Saturday,  Sunday or other day
designated as a holiday under Federal or California statute or regulation.


                                    ARTICLE V
                                    ---------
                               NEGATIVE COVENANTS
                               ------------------

         Borrower  further  covenants that so long as Bank remains  committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent,  liquidated  or  unliquidated)  of Borrower to Bank under any of the
Loan Documents remain outstanding,  and until payment in full of all obligations
of Borrower  subject  hereto,  Borrower  will not without  Bank's prior  written
consent:


                                      -11-


<PAGE>



         SECTION 5.1     USE OF FUNDS.  Use any of the  proceeds  of any  credit
extended hereunder except for the purposes stated in Article I hereof.

         SECTION 5.2     OTHER  INDEBTEDNESS. Create, incur, assume or permit to
exist any  indebtedness  or  liabilities  resulting  from  borrowings,  loans or
advances,  whether  secured or unsecured,  matured or  unmatured,  liquidated or
unliquidated,  joint or several, except (a) the liabilities of Borrower to Bank,
(b) any other  liabilities  of Borrower  existing as of, and  disclosed  to Bank
prior to, the date hereof,  and (c) other liabilities not to exceed an aggregate
principal amount of $3,000,000.00.

         SECTION 5.3     MERGER,  CONSOLIDATION,  TRANSFER OF ASSETS. Merge into
or consolidate with any other entity;  make any substantial change in the nature
of  Borrower's  business  as  conducted  as of the date  hereof;  acquire all or
substantially all of the assets of any other entity;  nor sell, lease,  transfer
or otherwise  dispose of all or a substantial or material  portion of Borrower's
assets except in the ordinary course of its business.

         SECTION 5.4     GUARANTIES.  Guarantee  or become  liable in any way as
surety,  endorser (other than as endorser of negotiable  instruments for deposit
or collection in the ordinary  course of  business),  accommodation  endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity,  except guaranties
of the obligations of Borrower's  foreign affiliates in amounts not to exceed an
aggregate of $150,000.00 at any time.

         SECTION 5.5     LOANS,  ADVANCES,  INVESTMENTS.  Make  any   loans   or
advances  to or  investments  in any  person  or entity  except,  (a) any of the
foregoing made in the ordinary  course of Borrower's  business in amounts not to
exceed an aggregate of  $100,000.00 at any time,  and (b) any  investments  made
with or through Bank,  whether in connection with a Bank deposit account or time
deposit or any other Bank investment product.

         SECTION 5.6     PLEDGE OF ASSETS. Mortgage,  pledge, grant or permit to
exist a security  interest in, or lien upon,  any of its assets of any kind, now
owned or hereafter  acquired,  except (a) any of the foregoing in favor of Bank,
(b) liens for taxes and  assessments  not yet due, (c) mechanics,  warehousemen,
carrier,  landlord and other  statutory liens which arise in the ordinary course
of Borrower's business for amounts not yet due, (d) liens on equipment leased by
Borrower,  and (e) liens in security  deposits  made in the  ordinary  course of
Borrower's business.


                                   ARTICLE VI
                                   ----------
                                EVENTS OF DEFAULT
                                -----------------

         SECTION 6.1     The occurrence of any of the following shall constitute
an "Event of Default" under this Agreement:


                                      -12-


<PAGE>



         (a)  Borrower shall fail to pay within five (5) Business Days following
the date due any principal, interest, fees or other amounts payable under any of
the Loan Documents.

         (b)  Any  financial  statement  or  certificate  furnished  to  Bank in
connection with, or any representation or warranty made by Borrower or any other
party  under  this  Agreement  or any  other  Loan  Document  shall  prove to be
incorrect, false or misleading in any material respect when furnished or made.

         (c)  Any  default  in  the   performance  of  or  compliance  with  any
obligation,  agreement or other provision  contained herein or in any other Loan
Document  (other than those referred to in subsections  (a) and (b) above),  and
with respect to any such default which by its nature can be cured,  such default
shall continue for a period of twenty (20) days from its occurrence.

         (d)  Any default in the payment or  performance of any  obligation,  or
any defined  event of  default,  under the terms of any  contract or  instrument
(other than any of the Loan  Documents)  pursuant to which Borrower has incurred
any debt or other liability to any person or entity, including Bank, except with
respect to any of the foregoing  which is contested by Borrower as permitted by,
and in accordance with the terms of, Section 4.7. hereof.

         (e)  Any defined event of default under any of the Loan Documents other
than this Agreement.

         (f)  Any of the  following  which is not  stayed or  discharged  within
thirty  (30) days of its  occurrence:  the filing of a notice of  judgment  lien
against Borrower;  or the recording of any abstract of judgment against Borrower
in any county in which Borrower has an interest in real property; or the service
of a notice of levy and/or of a writ of attachment or, execution,  or other like
process,  against  the assets of  Borrower;  or the entry of a judgment  against
Borrower.

         (g)  Borrower shall become insolvent,  or shall suffer or consent to or
apply for the  appointment  of a receiver,  trustee,  custodian or liquidator of
itself or any of its property,  or shall generally fail to pay its debts as they
become due,  or shall make a general  assignment  for the benefit of  creditors;
Borrower   shall  file  a   voluntary   petition  in   bankruptcy,   or  seeking
reorganization, in order to effect a plan or other arrangement with creditors or
any other relief under the Bankruptcy  Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time  ("Bankruptcy  Code"), or under
any state or Federal law granting relief to debtors, whether now or hereafter in
effect;  or any  involuntary  petition or proceeding  pursuant to the Bankruptcy
Code or any other  applicable  state or  Federal  law  relating  to  bankruptcy,
reorganization  or other  relief  for  debtors  is filed  or  commenced  against
Borrower,  or Borrower shall file an answer  admitting the  jurisdiction  of the
court and the material  allegations  of any  involuntary  petition;  or Borrower
shall be adjudicated a bankrupt, or an order for relief shall be entered against
Borrower by any court of competent jurisdiction under the Bankruptcy Code or any
other applicable state or Federal law relating to bankruptcy,  reorganization or
other relief for debtors.

                                      -13-


<PAGE>




         (h)  There  shall exist or occur any event or  condition  which Bank in
good faith believes impairs, or is substantially  likely to impair, the prospect
of payment or performance by Borrower of its  obligations  under any of the Loan
Documents.

         (i)  The dissolution or liquidation of Borrower.

         (j)  Any change in  ownership  during the term of this  Agreement of an
aggregate of  twenty-five  percent (25%) or more of the common stock of Borrower
in any single transaction or group of related transactions.

         SECTION 6.2     REMEDIES.  Upon the occurrence of any Event of Default:
(a) all  indebtedness  of Borrower  under each of the Loan  Documents,  any term
thereof to the  contrary  notwithstanding,  shall at Bank's  option and  without
notice become immediately due and payable without presentment,  demand,  protest
or notice of dishonor, all of which are hereby expressly waived by Borrower; (b)
the  obligation,  if any, of Bank to extend any further  credit under any of the
Loan Documents shall  immediately  cease and terminate;  and (c) Bank shall have
all rights,  powers and remedies available under each of the Loan Documents,  or
accorded by law,  including without limitation the right to resort to any or all
security for any credit  accommodation  from Bank subject hereto and to exercise
any  or all of the  rights  of a  beneficiary,  or  secured  party  pursuant  to
applicable law. All rights,  powers and remedies of Bank may be exercised at any
time by Bank and from time to time after the  occurrence of an Event of Default,
are cumulative and not exclusive,  and shall be in addition to any other rights,
powers or remedies provided by law or equity.


                                   ARTICLE VII
                                   -----------
                                  MISCELLANEOUS
                                  -------------

         SECTION 7.1     NO WAIVER. No delay, failure, or discontinuance of Bank
in exercising any right,  power or remedy under any of the Loan Documents  shall
affect or operate  as a waiver of such  right,  power or  remedy;  nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise  affect any other or further  exercise  thereof or the exercise of any
other right,  power or remedy.  Any waiver,  permit,  consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

         SECTION 7.2     NOTICES.  All  notices,  requests and demands which any
party is required  or may desire to give to any other party under any  provision
of this  Agreement  must be in writing  delivered to each party at the following
address:


                                      -14-


<PAGE>



         BORROWER:         MOTORCAR PARTS & ACCESSORIES, INC.
                           2727 Maricopa Street
                           Torrance, California 90503
                           Attn:   Richard Marks, President

         BANK:             WELLS FARGO BANK, NATIONAL ASSOCIATION
                           North Orange County RCBO
                           100 N. Harbor Boulevard, Suite 200
                           Anaheim, California 92805

or to such other  address as any party may  designate  by written  notice to all
other  parties.  Each such  notice,  request and demand shall be deemed given or
made as follows:  (a) if sent by hand delivery,  upon  delivery;  (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S.  mail,  first class and postage  prepaid;  and (c) if sent by telecopy,
upon receipt.

         SECTION 7.3     COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay
to Bank  immediately  upon  demand the full  amount of all  payments,  advances,
charges,  costs and expenses,  including reasonable  attorneys' fees (to include
outside  counsel  fees and all  allocated  costs of  Bank's  in-house  counsel),
incurred by Bank in connection  with (a) the negotiation and preparation of this
Agreement and the other Loan Documents,  Bank's continued  administration hereof
and  thereof,  and the  preparation  of any  amendments  and waivers  hereto and
thereto,  (b) the  enforcement  of Bank's  rights  and/or the  collection of any
amounts  which become due to Bank under any of the Loan  Documents,  and (c) the
prosecution  or  defense  of any  action in any way  related  to any of the Loan
Documents,  including without limitation, any action for declaratory relief, and
including  any of the  foregoing  incurred  in  connection  with any  bankruptcy
proceeding relating to Borrower.

         SECTION 7.4     SUCCESSORS, ASSIGNMENT. This Agreement shall be binding
upon and inure to the  benefit of the heirs,  executors,  administrators,  legal
representatives,  successors and assigns of the parties;  provided however, that
Borrower may not assign or transfer its interest  hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant  participations  in all or any part of, or any interest in,  Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose  all  documents  and  information  which Bank now has or may  hereafter
acquire  relating to any credit  extended by Bank to  Borrower,  Borrower or its
business, or any collateral required hereunder.

         SECTION 7.5     ENTIRE  AGREEMENT;  AMENDMENT.  This  Agreement and the
other Loan Documents  constitute the entire agreement  between Borrower and Bank
with respect to any extension of credit by Bank subject hereto and supersede all
prior negotiations,  communications,  discussions and correspondence  concerning
the subject matter  hereof.  This Agreement may be amended or modified only by a
written instrument executed by each party hereto.

                                      -15-


<PAGE>




         SECTION 7.6     NO THIRD PARTY  BENEFICIARIES.  This  Agreement is made
and entered into for the sole  protection  and benefit of the parties hereto and
their respective permitted successors and assigns, and no other person or entity
shall be a third party  beneficiary  of, or have any direct or indirect cause of
action  or claim in  connection  with  this  Agreement  or any other of the Loan
Documents to which it is not a party.

         SECTION 7.7     TIME.  Time  is  of  the  essence  of  each  and  every
provision of this Agreement and each other of the Loan Documents.

         SECTION 7.8     SEVERABILITY OF PROVISIONS.  If any  provision  of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be  ineffective  only to the  extent  of such  prohibition  or  invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.

         SECTION 7.9     GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

         SECTION 7.10    ARBITRATION.

         (a)  Arbitration.  Upon the demand of any party,  any Dispute  shall be
              -----------
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this Agreement.  A "Dispute"  shall mean any action,  dispute,
claim or  controversy  of any kind,  whether in contract or tort,  statutory  or
common law,  legal or equitable,  now existing or hereafter  arising under or in
connection with, or in any way pertaining to, any of the Loan Documents,  or any
past, present or future extensions of credit and other activities,  transactions
or  obligations  of any kind related  directly or  indirectly to any of the Loan
Documents,  including  without  limitation,  any of  the  foregoing  arising  in
connection  with the  exercise of any  self-help,  ancillary  or other  remedies
pursuant  to any of the Loan  Documents.  Any party may by  summary  proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and  expenses  incurred by such other  party in  compelling
arbitration of any Dispute.

         (b) Governing Rules.  Arbitration  proceedings shall be administered by
             ---------------
the American Arbitration  Association ("AAA") or such other administrator as the
parties  shall  mutually  agree  upon in  accordance  with  the  AAA  Commercial
Arbitration  Rules. All Disputes  submitted to arbitration  shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding  any  conflicting  choice  of law  provision  in any of the Loan
Documents.  The  arbitration  shall be  conducted  at a location  in  California
selected  by the AAA or  other  administrator.  If  there  is any  inconsistency
between the terms hereof and any such rules,  the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being  arbitrated.  Judgment
upon any award

                                      -16-


<PAGE>



rendered  in an  arbitration  may be entered in any court  having  jurisdiction;
provided  however,  that nothing contained herein shall be deemed to be a waiver
by any party that is a bank of the  protections  afforded  to it under 12 U.S.C.
ss.91 or any similar applicable state law.

         (c)  No Waiver; Provisional  Remedies,  Self-Help and  Foreclosure.  No
              -------------------------------------------------------------
provision  hereof  shall  limit  the right of any  party to  exercise  self-help
remedies  such as setoff,  foreclosure  against or sale of any real or  personal
property collateral or security, or to obtain provisional or ancillary remedies,
including  without  limitation  injunctive  relief,  sequestration,  attachment,
garnishment  or  the  appointment  of a  receiver  from  a  court  of  competent
jurisdiction  before,  after or during the pendency of any  arbitration or other
proceeding.  The  exercise of any such  remedy  shall not waive the right of any
party to compel arbitration or reference hereunder.

         (d)  Arbitrator Qualifications and Powers; Awards.  Arbitrators must be
              --------------------------------------------
active  members of the  California  State Bar or retired  judges of the state or
federal  judiciary  of  California,  with  expertise  in  the  substantive  laws
applicable to the subject  matter of the Dispute.  Arbitrators  are empowered to
resolve  Disputes by summary  rulings in response to motions  filed prior to the
final  arbitration  hearing.  Arbitrators  (i) shall  resolve  all  Disputes  in
accordance with the  substantive law of the state of California,  (ii) may grant
any  remedy or relief  that a court of the state of  California  could  order or
grant within the scope hereof and such ancillary  relief as is necessary to make
effective  any award,  and (iii)  shall have the power to award  recovery of all
costs and fees,  to impose  sanctions  and take such other  actions as they deem
necessary  to the same  extent a judge could  pursuant  to the Federal  Rules of
Civil  Procedure,  the California  Rules of Civil Procedure or other  applicable
law. Any Dispute in which the amount in  controversy is $5,000,000 or less shall
be decided by a single  arbitrator who shall not render an award of greater than
$5,000,000  (including  damages,  costs, fees and expenses).  By submission to a
single  arbitrator,  each party  expressly  waives any right or claim to recover
more than  $5,000,000.  Any Dispute in which the amount in  controversy  exceeds
$5,000,000  shall be decided by majority  vote of a panel of three  arbitrators;
provided however,  that all three  arbitrators must actively  participate in all
hearings and deliberations.

         (e)  Judicial Review.  Notwithstanding anything herein to the contrary,
              ---------------
in any arbitration in which the amount in controversy exceeds  $25,000,000,  the
arbitrators  shall be required to make  specific,  written  findings of fact and
conclusions of law. In such  arbitrations (A) the arbitrators shall not have the
power to make any award which is not supported by substantial  evidence or which
is based on legal  error,  (B) an award  shall not be binding  upon the  parties
unless the  findings  of fact are  supported  by  substantial  evidence  and the
conclusions of law are not erroneous  under the  substantive law of the state of
California,  and (C) the parties shall have in addition to the grounds  referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (1) whether the findings of fact rendered by the
arbitrators  are  supported  by  substantial  evidence,   and  (2)  whether  the
conclusions  of law are  erroneous  under  the  substantive  law of the state of
California.  Judgment  confirming  an award in such a proceeding  may be entered
only if a court  determines the award is supported by  substantial  evidence and
not based on legal error under the substantive law of the state of California.

                                      -17-


<PAGE>



         (f)  Real  Property  Collateral;  Judicial  Reference.  Notwithstanding
              ------------------------------------------------
anything herein to the contrary, no Dispute shall be submitted to arbitration if
the Dispute concerns indebtedness secured directly or indirectly, in whole or in
part,  by any real  property  unless  (i) the  holder of the  mortgage,  lien or
security   interest   specifically   elects  in  writing  to  proceed  with  the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that  might  accrue to them by virtue  of the  single  action  rule  statute  of
California,  thereby  agreeing  that all  indebtedness  and  obligations  of the
parties,  and  all  mortgages,   liens  and  security  interests  securing  such
indebtedness and obligations,  shall remain fully valid and enforceable.  If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with  California  Code of Civil  Procedure  Section 638 et
seq.,  and this  general  reference  agreement  is intended  to be  specifically
enforceable   in   accordance   with  said  Section  638.  A  referee  with  the
qualification  required herein for arbitrators shall be selected pursuant to the
AAA's  selection  procedures.  Judgment upon the decision  rendered by a referee
shall be  entered  in the  court in  which  such  proceeding  was  commenced  in
accordance with California Code of Civil Procedure Sections 644 and 645.

         (g)  Miscellaneous.  To the maximum  extent  practicable,  the AAA, the
              -------------
arbitrators  and the parties  shall take all action  required  to  conclude  any
arbitration  proceeding  within 180 days of the filing of the  Dispute  with the
AAA. No arbitrator or other party to an arbitration  proceeding may disclose the
existence,  content or results thereof, except for disclosures of information by
a party  required in the ordinary  course of its business,  by applicable law or
regulation,  or to the extent  necessary to exercise any judicial  review rights
set forth herein.  If more than one agreement for  arbitration by or between the
parties  potentially  applies  to a  Dispute,  the  arbitration  provision  most
directly  related to the Loan  Documents  or the  subject  matter of the Dispute
shall control. This arbitration  provision shall survive termination,  amendment
or  expiration  of any of the Loan  Documents  or any  relationship  between the
parties.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.


                                                     WELLS FARGO BANK
MOTORCAR PARTS & ACCESSORIES, INC.                   NATIONAL ASSOCIATION


By:_____________________________                     By:________________________

Title:__________________________                     Title:_____________________

By:_____________________________

Title:__________________________


                                      -18-





                                                                    Exhibit 10.5
                                                                    ------------

WELLS FARGO BANK                                   REVOLVING LINE OF CREDIT NOTE
- --------------------------------------------------------------------------------

$25,000,000.00                                               Anaheim, California
                                                                November 1, 1996

         FOR VALUE RECEIVED, the undersigned MOTORCAR PARTS & ACCESSORIES,  INC.
("Borrower")  promises  to  pay to the  order  of  WELLS  FARGO  BANK,  NATIONAL
ASSOCIATION  ("Bank") at its office at North Orange  County  RCBO,  100 N Harbor
Blvd Ste 200, Anaheim, CA 92805, or at such other place as the holder hereof may
designate,  in lawful money of the United  States of America and in  immediately
available funds, the principal sum of $25,000,000.00,  or so much thereof as may
be advanced and be outstanding,  with interest  thereon,  to be computed on each
advance from the date of its disbursement as set forth herein.

DEFINITIONS:

         As used herein,  the following  terms shall have the meanings set forth
after each,  and any other term  defined in this Note shall have the meaning set
forth at the place defined:

         (a) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in California are authorized or required by law to
close.

         (b) "Fixed Rate Term" means a period  commencing  on a Business Day and
continuing for 1, 2, 3 or 6 months, as designated by Borrower,  during which all
or a portion of the  outstanding  principal  balance of this
 Note bears interest
determined in relation to LIBOR;  provided however,  that no Fixed Rate Term may
be selected for a principal amount less than $250,000.00;  and provided further,
that no Fixed Rate Term shall extend beyond the scheduled  maturity date hereof.
If any Fixed Rate Term would end on a day which is not a Business Day, then such
Fixed Rate Term shall be extended to the next succeeding Business Day.

         (c) "LIBOR" means the rate per annum (rounded upward, if necessary,  to
the nearest  whole 1/8 of 1%)  determined by dividing Base LIBOR by a percentage
equal to 100% less any LIBOR Reserve Percentage.

             (i) "Base LIBOR" means the rate per annum for United  States dollar
deposits  quoted  by  Bank as the  Inter-Bank  Market  Offered  Rate,  with  the
understanding  that such rate is quoted by Bank for the  purpose of  calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed  Rate  Term for  delivery  of funds on said date for a period of time
approximately  equal to the  number  of days in such  Fixed  Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank  Market  Offered Rate upon such offers or other market  indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate



<PAGE>

including,  but not limited to, the rate offered for U.S. dollar deposits on the
London Inter-Bank Market.

             (ii)  "LIBOR  Reserve  Percentage"  means  the  reserve  percentage
prescribed  by the Board of  Governors  of the  Federal  Reserve  System (or any
successor)  for  "Eurocurrency  Liabilities"  (as defined in Regulation D of the
Federal  Reserve Board,  as amended),  adjusted by Bank for expected  changes in
such reserve percentage during the applicable Fixed Rate Term.

         (d) "Prime Rate" means at any time the rate of interest  most  recently
announced  within  Bank at its  principal  office  as its Prime  Rate,  with the
understanding  that the Prime Rate is one of Bank's base rates and serves as the
basis upon which  effective  rates of interest  are  calculated  for those loans
making reference  thereto,  and is evidenced by the recording  thereof after its
announcement in such internal publication or publications as Bank may designate.

INTEREST:

         (a) Interest. The outstanding principal balance of this Note shall bear
             --------
interest  (computed on the basis of a 360-day year,  actual days elapsed) either
(i) at a fluctuating  rate per annum .25000% below the Prime Rate in effect from
time to  time,  or  (ii) at a fixed  rate  per  annum  determined  by Bank to be
1.65000%  above  LIBOR in effect on the first day of the  applicable  Fixed Rate
Term.  When interest is determined in relation to the Prime Rate, each change in
the rate of interest  hereunder  shall  become  effective on the date each Prime
Rate change is  announced  within  Bank.  With  respect to each LIBOR  selection
option selected hereunder, Bank is hereby authorized to note the date, principal
amount,  interest rate and Fixed Rate Term  applicable  thereto and any payments
made  thereon on Bank's  books and records  (either  manually  or by  electronic
entry) and/or on any schedule  attached to this Note,  which  notations shall be
prima facie evidence of the accuracy of the information noted.

         (b) Selection of Interest Rate Options. At any time any portion of this
             ----------------------------------
Note bears  interest  determined  in relation to LIBOR,  it may be  continued by
Borrower at the end of the Fixed Rate Term  applicable  thereto so that all or a
portion  thereof bears  interest  determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower.  At any time any portion
of this Note bears interest  determined in relation to the Prime Rate,  Borrower
may convert all or a portion  thereof so that it bears  interest  determined  in
relation to LIBOR for a Fixed Rate Term designated by Borrower.  At such time as
Borrower  requests an advance  hereunder  or wishes to select a LIBOR option for
all or a portion of the outstanding  principal balance hereof, and at the end of
each Fixed Rate  Term,  Borrower  shall  give Bank  notice  specifying:  (i) the
interest rate option  selected by Borrower;  (ii) the principal  amount  subject
thereto; and (iii) for each LIBOR selection,  the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone so long as, with respect to
each LIBOR selection,  (A) Bank receives written  confirmation from Borrower not
later than 3 Business Days after such  telephone  notice is given,  and (B) such
notice is given to Bank prior to 10:00 a.m.,  California  time, on the first day
of the Fixed Rate Term.  For each LIBOR option  requested  hereunder,  Bank will
quote the applicable fixed rate to Borrower at approximately 10:00

                                       -2-


<PAGE>



a.m., California time, on the first day of the Fixed Rate Term. If Borrower does
not  immediately  accept the rate quoted by Bank, any  subsequent  acceptance by
Borrower shall be subject to a  redetermination  by Bank of the applicable fixed
rate; provided however,  that if Borrower fails to accept any such rate by 11:00
a.m.,  California  time, on the Business Day such  quotation is given,  then the
quoted  rate shall  expire and Bank shall have no  obligation  to permit a LIBOR
option to be selected on such day.  If no  specific  designation  of interest is
made at the time any advance is  requested  hereunder or at the end of any Fixed
Rate Term, Borrower shall be deemed to have made a Prime Rate interest selection
for such advance or the principal amount to which such Fixed Rate Term applied.

         (c)      Additional LIBOR Provisions.
                  ---------------------------

                  (i)   If Bank at any time shall determine  that for any reason
adequate and reasonable  means do not exist for  ascertaining  LIBOR,  then Bank
shall  promptly  give notice  thereof to  Borrower.  If such notice is given and
until such notice has been  withdrawn by Bank,  then (A) no new LIBOR option may
be  selected  by  Borrower,  and (B) any  portion of the  outstanding  principal
balance hereof which bears interest determined in relation to LIBOR,  subsequent
to the end of the Fixed  Rate  Term  applicable  thereto,  shall  bear  interest
determined in relation to the Prime Rate.

                  (ii)  If any law, treaty, rule, regulation or determination of
a court or governmental authority or any change therein or in the interpretation
or application thereof (each, a "Change in Law") shall make it unlawful for Bank
(A) to make LIBOR options available hereunder, or (B) to maintain interest rates
based  on  LIBOR,  then in the  former  event,  any  obligation  of Bank to make
available such unlawful LIBOR options shall immediately be cancelled, and in the
latter event,  any such unlawful  LIBOR-based  interest  rates then  outstanding
shall be  converted,  at Bank's  option,  so that interest on the portion of the
outstanding  principal  balance subject thereto is determined in relation to the
Prime Rate;  provided  however,  that if any such Change in Law shall permit any
LIBOR-based interest rates to remain in effect until the expiration of the Fixed
Rate Term applicable  thereto,  then such permitted  LIBOR-based  interest rates
shall continue in effect until the expiration of such Fixed Rate Term.  Upon the
occurrence  of  any  of  the  foregoing  events,  Borrower  shall  pay  to  Bank
immediately  upon demand such amounts as may be necessary to compensate Bank for
any fines, fees,  charges,  penalties or other costs incurred or payable by Bank
as a result  thereof  and  which are  attributable  to any  LIBOR  options  made
available to Borrower  hereunder,  and any  reasonable  allocation  made by Bank
among its operations shall be conclusive and binding upon Borrower.

                  (iii) If any  Change  in Law or  compliance  by Bank  with any
request or  directive  (whether or not having the force of law) from any central
bank or other governmental authority shall:

                  (A)   subject  Bank to any tax,  duty or other  charge with
                        respect to any LIBOR options,  or change the basis of
                        taxation of payments to Bank of principal,  interest,
                        fees or any other amount  payable  hereunder  (except
                        for  changes  in the rate of tax on the  overall  net
                        income of Bank); or

                                       -3-


<PAGE>


                  (B)   impose,   modify  or  hold  applicable  any  reserve,
                        special   deposit,   compulsory   loan   or   similar
                        requirement against assets held by, deposits or other
                        liabilities  in or for the  account  of,  advances or
                        loans by, or any  other  acquisition  of funds by any
                        office of Bank; or

                  (C)   impose on Bank any other condition;

and the  result  of any of the  foregoing  is to  increase  the  cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce any
amount  receivable  by Bank in  connection  therewith,  then in any  such  case,
Borrower  shall pay to Bank  immediately  upon  demand  such  amounts  as may be
necessary to compensate  Bank for any  additional  costs incurred by Bank and/or
reductions  in amounts  received  by Bank which are  attributable  to such LIBOR
options.  In  determining  which costs  incurred by Bank  and/or  reductions  in
amounts received by Bank are attributable to any LIBOR options made available to
Borrower hereunder,  any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.

         (d) Payment of Interest. Interest accrued on this Note shall be payable
             -------------------
on the 1st day of each month, commencing December 1, 1996.

         (e) Default Interest. From and after the maturity date of this Note, or
             ----------------
such earlier date as all principal  owing  hereunder  becomes due and payable by
acceleration or otherwise,  the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day  year,  actual  days  elapsed)  equal to 4% above the rate of
interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

         (a) Borrowing and Repayment.  Borrower may from time to time during the
             -----------------------
term of this Note borrow,  partially or wholly repay its outstanding borrowings,
and reborrow,  subject to all of the  limitations,  terms and conditions of this
Note and of the  Credit  Agreement  between  Borrower  and Bank  defined  below;
provided however,  that the total  outstanding  borrowings under this Note shall
not at any time exceed the principal  amount stated above.  The unpaid principal
balance  of this  obligation  at any time  shall be the total  amounts  advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for any Borrower,  which balance may be endorsed  hereon from time to time
by the holder.  The outstanding  principal balance of this Note shall be due and
payable in full on June 1, 1998.

         (b) Advances.  Advances hereunder, to the total amount of the principal
             --------
sum  available  hereunder,  may be made by the  holder  at the  oral or  written
request  of (i)  RICHARD  MARKS  or MEL  MARKS or  DEBRA  L.  SCHWARTZ  or PETER
BROMBERG,  any one acting  alone,  who are  authorized  to request  advances and
direct the disposition of any advances until written notice of the revocation of
such authority is received by the holder at the office designated above, or (ii)
any

                                       -4-


<PAGE>


person,  with respect to advances  deposited to the credit of any account of any
Borrower  with  the  holder,  which  advances,  when  so  deposited,   shall  be
conclusively  presumed to have been made to or for the benefit of each  Borrower
regardless  of the fact that  persons  other  than those  authorized  to request
advances may have authority to draw against such account.  The holder shall have
no  obligation to determine  whether any person  requesting an advance is or has
been authorized by any Borrower.

         (c)  Application  of Payments.  Each payment made on this Note shall be
              ------------------------
credited  first,  to any  interest  then  due  and  second,  to the  outstanding
principal  balance hereof.  All payments  credited to principal shall be applied
first,  to the outstanding  principal  balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal  balance of this Note which bears  interest  determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.

PREPAYMENT:

         (a) Prime Rate.  Borrower  may prepay  principal on any portion of this
             ----------
Note which bears interest  determined in relation to the Prime Rate at any time,
in any amount and without penalty.

         (b) LIBOR.  Borrower  may prepay  principal on any portion of this Note
             -----
which  bears  interest  determined  in  relation to LIBOR at any time and in the
minimum  amount  of  $250,000.00;  provided  however,  that  if the  outstanding
principal  balance of such  portion of this Note is less than said  amount,  the
minimum  prepayment  amount shall be the entire  outstanding  principal  balance
thereof.  In consideration of Bank providing this prepayment option to Borrower,
or if any such  portion  of this Note shall  become due and  payable at any time
prior to the last day of the Fixed Rate Term applicable  thereto by acceleration
or otherwise,  Borrower shall pay to Bank immediately upon demand a fee which is
the sum of the discounted  monthly  differences for each month from the month of
prepayment  through the month in which such Fixed Rate Term matures,  calculated
as follows for each such month:

             (i)   Determine  the amount of interest  which  would have  accrued
                   ---------  
each month on the amount prepaid at the interest rate  applicable to such amount
had it remained outstanding until the last day of the Fixed Rate Term applicable
thereto.

             (ii)  Subtract  from the amount  determined in (i) above the amount
                   --------
of interest  which would have  accrued for the same month on the amount  prepaid
for the remaining term of such Fixed Rate Term at LIBOR in effect on the date of
prepayment  for new loans made for such term and in a principal  amount equal to
the amount prepaid.

             (iii) If the result  obtained in (ii) for any month is greater than
zero, discount that difference by LIBOR used in (ii) above.


                                       -5-


<PAGE>


Each  Borrower  acknowledges  that  prepayment of such amount may result in Bank
incurring  additional  costs,  expenses  and/or  liabilities,  and  that  it  is
difficult  to  ascertain  the  full  extent  of  such  costs,   expenses  and/or
liabilities.  Each  Borrower,  therefore,  agrees  to  pay  the  above-described
prepayment fee and agrees that said amount  represents a reasonable  estimate of
the prepayment costs,  expenses and or liabilities of Bank. If Borrower fails to
pay any  prepayment  fee when  due,  the  amount  of such  prepayment  fee shall
thereafter  bear interest  until paid at a rate per annum 4.000% above the Prime
Rate in effect  from  time to time  (computed  on the  basis of a 360-day  year,
actual days  elapsed).  Each change in the rate of interest on any such past due
prepayment  fee shall  become  effective  on the date each Prime Rate  change is
announced within Bank.

EVENTS OF DEFAULT:

         This  Note  is  made  pursuant  to and is  subject  to  the  terms  and
conditions of that certain Credit  Agreement  between Borrower and Bank dated as
of June 1, 1996,  as amended  from time to time (the  "Credit  Agreement").  Any
default in the payment or performance of any obligation  under this Note, or any
defined event of default under the Credit Agreement,  shall constitute an "Event
of Default" under this Note.

MISCELLANEOUS:

         (a) Remedies. Upon the occurrence of any Event of Default as defined in
             --------
the Credit  Agreement,  the holder of this Note,  at the  holder's  option,  may
declare  all  sums  of  principal  and  interest  outstanding  hereunder  to  be
immediately   due  and   payable   without   presentment,   demand,   notice  of
nonperformance,  notice of protest,  protest or notice of dishonor, all of which
are expressly waived by each Borrower, and the obligation, if any, of the holder
to extend any further credit  hereunder shall  immediately  cease and terminate.
Each Borrower shall pay to the holder immediately upon demand the full amount of
all  payments,  advances,  charges,  costs and  expenses,  including  reasonable
attorneys'  fees (to include outside counsel fees and all allocated costs of the
holder's  in-house  counsel),  expended or incurred by the holder in  connection
with the enforcement of the holder's rights and/or the collection of any amounts
which become due to the holder under this Note,  and the  prosecution or defense
of any action in any way related to this Note, including without limitation, any
action for declaratory relief, whether incurred at the trial or appellate level,
in an  arbitration  proceeding or otherwise,  and including any of the foregoing
incurred  in  connection  with  any  bankruptcy  proceeding  (including  without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to any Borrower or any other person or entity.

         (b)  Obligations  Joint and  Several.  Should  more than one  person or
              -------------------------------
entity sign this Note as a Borrower, the obligations of each such Borrower shall
be joint and several.


                                       -6-


<PAGE>


         (c)  Governing  Law.  This Note shall be governed by and  construed  in
              --------------
accordance with the laws of the state of California.

         IN WITNESS  WHEREOF,  the  undersigned has executed this Note as of the
date first written above.


MOTORCAR PARTS & ACCESSORIES, INC.


By:_______________________________

Title:____________________________

By:_______________________________

Title:____________________________


                                       -7-






                                                                   Exhibit 10.17
                                                                   -------------


                               AMENDMENT TO LEASE

         This Amendment to Lease,  dated for reference purposes only, October 3,
1996,  between  Golkar   Enterprises,   Ltd.,  Lessor  and  Motorcar  Parts  and
Accessories, Inc., Lessee, who agree as follows:

         1.  Recitals:  This  Amendment  to Lease is made with  reference to the
             --------
following facts and objectives:

             a.     Lessor and Lessee entered into a written Lease (the "Lease")
dated  September  19, 1995,  whereby  Lessor  leased to Lessee an  approximately
79,708  square  foot  portion  of a  larger  building  commonly  known  as  2931
California Street, Torrance, California 90503;

             b.     Lessee   desires  to  expand  the  leased  Premises  to  add
approximately  147,600 square feet commonly known as 2929 California Street (the
"additional space") and extend the term through March 31, 2002.

         2.  Additions to Leased Premises:  Commencing  December 1, 1996, Lessee
             -----------------------------
shall take  possession  of an  approximately  22,700  square foot portion of the
147,600 square feet of the additional  space.  Commencing April 1, 1997,  Lessee
shall take  possession  of the balance of the space  resulting in a total leased
Premises  of  approximately  227,368  square feet and  parking as  described  in
Exhibit "A" - 325 spaces.

         3.  Term: The Term of the Lease is extended through March 31, 2002.
             -----

         4.  Base
 Rent:  Commencing  December 1, 1996  monthly Base Rent will be
             ---------
the following:

         79,708 square feet                     $21,000
         22,700 square feet                       6,015
                                                -------
                                                $27,015

Commencing April 1, 1997, and continuing  through  September 30, 1999, base rent
on the entire 227,368 square feet will be $60,252.00 per month.  From October 1,
1999 through March 31, 2002, Base Rent shall be $64,771.00 per month.

         5.  Security  Deposit:  Lessee's present security deposit of $17,000.00
             -----------------
shall be  increased  to  $60,252.00,  bearing  interest at 7 1/4% per annum with
accrued  interest  earned on said deposit  payable to Lessee on April 1, of each
year of the lease term or any extension thereof.

         6.  Condition  of  Additional  Space:  The  additional  space  shall be
             --------------------------------
delivered in broom clean  condition  with all systems in good  working  order as
described in Paragraph 2.2 of




<PAGE>

the Lease.  Lessor  warrants that these systems remain in good working order for
six (6)  months  after  April 1,  1997.  In  addition,  the  roof  shall be in a
water-tight condition.

         7.  Non-Disturbance Agreement:  Concurrently with the execution of this
             -------------------------
Amendment to Lease, Lessor will use its best efforts to obtain a Non-Disturbance
Agreement from Lessor's mortgage holder existing at that time or any future time
in which the Lease is in effect.

         8.  Tenant Improvements: Lessor, at Lessor's sole cost and expense will
             -------------------
do the  modifications  described in Exhibit "B" commencing April 1, 1997. Lessor
and  Lessee  agree  to  cooperate  in   facilitating   the  completion  of  such
improvements inasmuch as Lessee will be in possession of the Premises during the
time the work is being performed.

         9.  Right  to  Sublease  or  Assign.  Lessee  shall  have the right to
             -------------------------------
sublease  all or any  portion of the  Premises,  or assign its rights  under the
Lease,  subject to  Lessor's  prior  consent,  which  shall not be  unreasonably
withheld.  Lessee  shall have the right to  sublease  all or any  portion of the
Premises,  or assign  all of the  Premises,  to any  parent,  subsidiary  and/or
affiliate.

         10.  Options to Extend  Term.  If this Lease has not been  cancelled or
              ------------------------ 
terminated prior to March 31, 2002, and if the Lessee is at the time of exercise
and through March 31, 2002, in possession of the Premises and is not at the time
of exercise and through March 31, 2002 in default of any of terms,  covenants or
conditions of this Lease, Lessee is hereby granted two (2) options to extend the
Term of this Lease for two (2) additional  terms of five (5) years each from and
after March 31, 2002; provided that Lessee gives written notice to Lessor of the
exercise of each option of  extension  at least one  hundred  twenty  (120) days
prior to the  expiration of the preceding  Term. The terms and conditions of the
Lease  during the  extended  five (5) year option  periods  shall be the same as
herein  contained,  except  that the  monthly  Base Rent shall be  increased  to
ninety-five  percent  (95%) of the then  prevailing  fair rental value as of the
commencement date of each option period,  which shall be mutually agreed upon by
Lessor and Lessee,  if  possible.  However,  no  reevaluation  shall result in a
rental rate less than that established for the prior rental period. In the event
that  Lessor and Lessee  cannot  mutually  agree upon the then  prevailing  fair
rental value of the Premises,  the  determination of the fair rental value as of
the commencement  date of each option period shall be based upon an appraisal by
an S.I.R. broker or an M.A.I.  appraiser acceptable to both Lessor and Lessee to
the Los Angeles Chapter of the American Arbitration  Association.  All costs and
fees of said broker or of the American  Arbitration  Association  shall be borne
equally by Lessor and Lessee.  The fair rental value shall be  increased  during
the second thirty (30) months of each five (5) year extended term, the amount of
such  increases  to be  agreed  upon  at the  time  the  fair  rental  value  is
established.


                                       -2-


<PAGE>



         Except as expressly set forth herein, all other terms and conditions of
the Lease shall remain unaffected by this Amendment, and are hereby ratified and
affirmed.

GOLKAR ENTERPRISES, LTD.                      MOTORCAR PARTS & ACCESSORIES, INC.


- --------------------------------              ----------------------------------
BY: DAVID V. KARNEY
GENERAL PARTNER


DATED: _________________________              DATED: ___________________________

                                       -3-


<PAGE>












  [Exhibit A is a floor plan of the leased premises and adjacent parking area.]

                                       -4-


<PAGE>


                                    Exhibit B

         1.  Upgrade  power to meet  Lessee's  requirements  not to exceed 3,000
AMPS,  277/480  volt 3 phase  power,  exact  amount of power and  location to be
agreed upon by Lessor and Lessee.

         2.  Complete  installation  of 400 watt metal halide light  fixtures in
balance  of  2929  California  Street  and  replace  existing  lighting  at 2931
California  Street with 400 watt metal halide lighting  fixtures;  both lighting
grids to be the same as those existing at 2929 California Street.

         3.  Construct  additional  restrooms to accommodate  requirements for a
total of 400  employees  for the entire  Premises,  the  location to be mutually
agreed upon by the Lessor and Lessee per the approximate  location  indicated on
the attached plan.

         4.  Remove  excess  offices  (both  levels)  in  easterly  side of 2929
California  Street  (see  plan) and  modify  sprinklers  and  lighting  to match
existing high bay warehouse.

         5.  Paint and recarpet remaining office areas at 2929 California Street
after removing demountable partitions as shown on plan.

         6.  Remove most of lab area in northeast  side as agreed upon by Lessor
and Lessee.

         7.  Add six (6) dock levelers at locations to be specified by Lessee.

         8.  Reopen three (3) existing openings between 2929 and 2931 California
Street.

         9.  Patch and repaint existing east-west partition  separating high bay
space.

         10. Install fire sprinkler  earthquake  bracing in areas not already in
compliance.




  [Exhibit B includes a floor plan depicting the planned tenant improvements.]

                                       -5-


<PAGE>

               [LETTERHEAD OF MOTORCAR PARTS & ACCESSORIES, INC.]


November 14, 1996

David V. Karney
12011 San Vicente Blvd., Suite 600
Los Angeles, California 90049

Re:      2929-31 California Street
         2727 Maricopa Street

Dear David:

At long last,  attached  please find four (4) executed  Lease  Addendums for the
above-referenced  property for your review and  execution.  We  appreciate  your
patience while we have been finalizing various issues concerning our occupancy.

Based upon our recent  walk-through  of the  property  with Al Drake and further
evaluation  of our  requirements,  we would like to request  that the  following
clarifications  to  Exhibit B be  incorporated  herein  into the  agreement  for
2929-31 California Street.

1.       Restrooms
         ---------

         Paragraph 3 is hereby amended to reflect the parties agreement that the
         additional  restrooms  to be  added  shall  be  based  upon a  mutually
         agreeable   plan  to  be  prepared  by  Lessor  to   accommodate   code
         requirements  for a  total  of 400  employees,  said  plan  to  include
         expanding the existing  warehouse  restrooms located near the southerly
         loading  doors and  expanding  the  existing  office  restrooms in 2929
         California, in addition to new restrooms to be located in the warehouse
         area per the approximate location on the attached plan.

2.       Office Area
         -----------

         Since we do not yet have a final  layout for our use of the office area
         in 2929 California Street, it is understood that Paragraph 4 of Exhibit
         B is hereby  amended to reflect the parties  agreement  that Lessor and
         Lessee shall  mutually  agree to a final space plan for the office area
         that will provide for the removal of most of the demountable partitions
         in the  office  area and the  addition  of a  lunchroom  with  sink and
         cabinets  in  a  mutually  agreeable  location  next  to  the  existing
         restrooms. In addition, Lessee shall have the right to select paint and
         carpet specifications,  and Lessee shall be responsible for the cost of
         any  upgrade  to paint and carpet  above  Lessor's  building  standard.
         



<PAGE>

Letter to Mr. David V. Karney 
November 14, 1996 
Page Two


3.       Electrical Upgrade
         ------------------

         We have reviewed the proposed location for the new electrical  service,
         as indicated on the attached  plan  (Exhibit B), and the parties  agree
         that it shall be Lessor's responsibility for the cost of the electrical
         installation.

         We are appreciative of your patience and cooperation in concluding this
transaction  and we  look  forward  to  many  years  of  future  success  in the
properties. Please do not hesitate to contact me should you have any questions.

Best regards,



Richard Marks
President and Chief Operating Officer





Agreed to and accepted:


- -----------------------
David V. Karney

                                       -2-





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<CIK>                         0000918251
<NAME>                        MOTORCAR PARTS & ACCESSORIES, INC.
       
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