Preheat oven to 350 degrees. Grease and flower a 12 cup fluted bundt pan or 10 inch tube pan. Beat cake mix, dry pudding mix, water, eggs, and oil in large bowl with electric mixer on low speed until well blended. Beat on high speed for 2 minutes. Gently stir in apples. Pour into prepared pan.
Bake 50 minutes to a hour or until toothpick inserted in center comes out clean. Cool 20 minutes, remove from pan. Cool completely on wire rack.
Microwave caramels and milk in microwaveable bowl on high 1 1/2 minutes stirring every 30 seconds until blended. Cool 10 minutes until slightly thickened. Drizzle over cake.