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corresp

September 14, 2005

Linda Cvrkel, Branch Chief

Division of Corporation Finance

Securities and Exchange Commission

Mail Stop 3561

Washington, D.C. 20549

RE: Delphi Corporation — Commission File no: 1-14787 —

Form 10-K for the year ended December 31, 2004

Dear Ms. Cvrkel:

This letter responds to your letter, dated August 30, 2005, relating to comments of the Staff of
the Securities and Exchange Commission for the above-referenced filing. For ease of reference the
letter repeats the comment of the Staff in bold above our response. We acknowledge that:

    •

    the company is responsible for the adequacy and accuracy of the disclosure in the
filing;

    •

    staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

    •

    the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities law of the United States.

Note 20. Quarterly Data (Unaudited), page 102

1. According to the table included on page 102, we note that net loss for the quarter ended
December 31, 2004 was significantly higher than any other quarterly period presented in the table.
Further, we also note that according to your disclosures provided in note 6 of your consolidated
financial statements (page 76), your 2004 net loss of $4,840 was largely attributed to the increase
in your valuation allowance on deferred tax assets of $4,371 million, of which $4,667 million was
recorded as income tax expense. We note this was due to your belief that you could no longer
support the realization of such assets under SFAS No. 109. In this regard, please explain in
greater detail the facts and circumstances which evidently lead you to believe that you were no
longer able to support the realization of your deferred tax assets and tell us the reason(s) why
you believe that recognition of the increase in allowance was appropriate in the quarter ended
December 31, 2004 rather than an earlier period. Also, tell us your policy with respect to how
often you evaluate your valuation allowance for changes in circumstance(s) which result in a change
in the realizability of the related deferred tax asset in future periods. If you evaluate your
valuation allowance on an annual basis, please tell us why you believe such basis is appropriate
and adequate.

As required by SFAS 109, paragraph 17, Delphi computes deferred tax assets and liabilities at each
balance sheet reporting date, including consideration regarding the need for a valuation allowance
against our deferred tax assets (paragraph 17 e. below)

e. Reduce deferred tax assets by a valuation allowance if, based on the weight of
available evidence, it is more likely than not (a likelihood of more than 50
percent) that some portion or all of the deferred tax assets will not be realized.
The valuation allowance should be sufficient to reduce the deferred tax asset to the
amount that is more likely than not to be realized.

Delphi’s evaluation of the need for a valuation allowance against its deferred tax assets is
performed by taxing jurisdiction on an annual basis in the fourth quarter of each year.
Additionally, Delphi considers at each interim reporting date whether circumstances including the
current and projected

5725 Delphi Drive       Troy, Michigan 48098-2815 USA

Ms. Linda Cvrkel

Division of Corporation Finance

Securities and Exchange Commission

September 14, 2005

Page 2 of 6

financial results for the operations have changed such that reconsideration of the recoverability
of its deferred tax assets is required. As described in Note 6. Income Taxes to Delphi’s
Consolidated Financial Statements as of December 31, 2004 (page 78 of Delphi’s 2004 Annual Report
on Form 10-K), valuation allowances are provided against deferred tax assets, when based on all
available evidence, it is considered more likely than not that some portion or all of the recorded
deferred tax assets will not be realized in future periods. As described in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Significant Accounting
Policies and Critical Accounting Estimates (page 50 of Delphi’s 2004 Annual Report on Form 10-K),
the primary basis for the conclusion on the recoverability of deferred tax assets was the forecast
of taxable earnings in the related tax jurisdiction. Based on this process, in May 2005, we
determined that a 100% valuation allowance was required for our U.S. net deferred tax assets as of
December 31, 2004.

Our consideration of the recoverability of U.S. deferred tax assets includes review and analysis of
positive and negative evidence as defined by SFAS No. 109 to determine whether a valuation
allowance is necessary and if so, what amount. The primary reason for our conclusion that a
valuation allowance was required as of December 31, 2004 is Delphi’s current and expected future
operating performance in the U.S. Delphi experienced losses in 2004 in excess of previous years
(see table summary below) and the future outlook indicates losses will remain at similar or greater
levels for the near future based on Delphi’s current cost structure and GMNA (General Motors North
America) production volume forecasts which began to deteriorate in the second half of 2004 and
which deterioration sharply accelerated in 2005. Our own projections are confirmed by independent
forecasts for future years of GMNA production which are flat to declining with 2005 volumes (see
Summary of DRI (third party service which publishes expected production volumes for the automotive
sector) forecasts of GMNA volumes for 2006-2008 set forth in the table on page 5 of this letter).
We concluded that a 100% valuation allowance was required for the U.S. deferred tax assets because
based on Delphi’s current operating environment in the U.S. we can not predict when Delphi will
return to profitability such that all or a portion of the U.S. deferred tax assets will be
recoverable.

Since the December 31, 2004 financial statements had not been issued when the significant change in
the outlook of the Company’s U.S. operations in early 2005 occurred, it was considered a Type I
subsequent event as defined by SAS No. 1, section 560:

.03 The first type consists of those events that provide additional evidence
with respect to conditions that existed at the date of the balance sheet and affect
the estimates inherent in the process of preparing financial statements. All
information that becomes available prior to the issuance of the financial statements
should be used by management in its evaluation of the conditions on which the
estimates were based. The financial statements should be adjusted for any changes in
estimates resulting from the use of such evidence. ...

Therefore we determined that the valuation allowance against the U.S. deferred tax assets should be
recorded as of December 31, 2004.

Supplemental Information

Delphi’s consideration of negative evidence (as defined by paragraph 23 of SFAS 109) for valuation
allowances of its U.S. deferred tax assets for 2002 through 2004 is included in the chart on page 3
of this letter. This chart shows a significant change in negative evidence from 2003 to 2004,
which primarily related to a significant decline in the expected future operating performance of
the Company in the U.S. During the first quarter of 2005 GMNA significantly reduced its 2005
production plans (by approximately 10% as shown in the chart on page 5 of this letter).
Furthermore, DRI’s outlook for future years’ GMNA production declined by similar amounts. We
believe this decline is partly in response to GMNA’s reliance on large SUV’s and pick-up trucks and
the increase in gas prices. Given the fact that a significant portion of Delphi’s current cost
structure is fixed due to contractual obligations to our hourly employees, this volume decline will
reduce revenue in excess of the reduction in costs and will therefore result in additional U.S.
losses for Delphi. Considering the significant

Ms. Linda Cvrkel

Division of Corporation Finance

Securities and Exchange Commission

September 14, 2005

Page 3 of 6

decline in GMNA volume for 2005 and the uncertainty regarding these volumes for 2006-2007, the
projected taxable income for 2005-2007 and future periods significantly declined such that it was
no longer more likely than not that Delphi would recover future deductions for employee benefit
payments and utilize net operating loss carryforwards (NOLs) within the expiration period for these
carryforwards. In addition, we also considered practice guidance from our independent auditor’s
research tool, which discourages companies with cumulative losses in recent years from assuming
future operating performance different from the company’s recent operating history.

A significant portion of Delphi’s deferred tax assets are attributable to future tax deductions
related to payments of other postretirement benefits, most of which will not be paid (and thereby
become deductible for income tax purposes) until more than 20 years into the future. The senior
management team at Delphi is currently working to address the lack of profitability in the U.S.
operations driven by the inability of the Company to adjust its fixed cost structure in response to
sharply lower volumes in the very near term but we are unable to predict whether these efforts will
be successful. Since we do not have objectively verifiable evidence (such as provided for in
paragraph 24 of SFAS 109) to support a projection of taxable income in the foreseeable future
sufficient to utilize tax deduction in future years, Delphi has concluded that it is no longer more
likely than not that the deferred tax assets, even those with a term beyond 20 years will be
realized.

The following chart provides an analysis of the extent to which negative evidence existed at the
financial statement dates for December 31, 2002, 2003 and 2004.

Consideration of Negative Evidence for Valuation Allowance on U.S. Deferred Tax Assets

    Negative Evidence

    (as defined by par. 23 FAS 109)

    2002

    2003

    2004

    1.

    Cumulative losses in recent
years (commonly considered to
be the current year and two
proceeding years)

    No

    Yes, but only due
to restructuring
charges*

    Yes

    2.

    A history of operating
losses or tax credit
carryforwards expiring unused

    No

    No

    No

    3.

    Losses expected in early
future years (by a presently
profitable entity)

    No

    No
(early future years
expected to be near
break even)

    Yes

    4.

    Unsettled circumstances
that, if unfavorably resolved,
would adversely affect future
operations and profit levels
on a continuing basis in
future years

    n/a

    n/a

    n/a

    5.

    A carryback, carryforward
period so brief that it would
limit realization of tax
benefits if (1) a significant
deductible temporary
difference is expected to
reverse in single year or (2)
the entity operates in a
traditionally cyclical
business

    No

    Yes- we recorded a
100% valuation
allowance for U.S.
deferred tax assets
related to
carryforwards with
expirations of 5
years or less

    The conclusion for

2004 was that all

net deferred tax

assets required a

100% valuation

allowance

Ms. Linda Cvrkel

Division of Corporation Finance

Securities and Exchange Commission

September 14, 2005

Page 4 of 6

The consideration of cumulative losses in recent years was based on the following financial
information:

    Restated

    U.S. pre-tax

    U.S. pre-tax

    Pro Forma

    income

    Effects of

    income

    Restructuring

    U.S. pre-tax

    Year

    (loss)

    Restatement

    (loss)

    Charges*

Income (loss)

    1999

    $
    1,349

    $
    (58
    )

    $
    1,291

    $
    —

    $
    1,291

    2000

    1,319

    (404
    )

    915

    —

    915

    2001

    (657
    )

    (145
    )

    (802
    )

    775

    (27
    )

    2002

    188

    (52
    )

    136

    243

    379

    2003

    (717
    )

    54

    (662
    )

    606

    (56
    )

    2004

    (1,177
    )

    (151
    )

    (1,328
    )

    708

    (602
    )

*The Company followed guidance set forth in the Deloitte Accounting Manual — Income Taxes,
Question No. FASB 109: 23-6 which says:

“...any items included in the three year historical amounts or pretax income or loss
from continuing operations that are nonrecurring in nature are also excluded because
their effects are also not indicative of future operations. Examples of nonrecurring
items that are typically excluded include: one-time restructuring charges that
permanently remove fixed costs from future cash flows ...”

The basis for Delphi’s consideration of losses in early future years is the Delphi budget and
business plan (“BBP”). The BBP is developed based on DRI projections of production volumes.
Delphi’s U.S. operations are significantly impacted by GMNA production volume since most of our
U.S. business is with General Motors. The following chart shows how GMNA production volume was
estimated by DRI (for use in our BBP for 2004-2006 developed in late 2003 and BBP for 2005-2007
developed in late 2004). It also shows how those estimates for the future years changed over time
and compared to actual production. Specifically in the latter part of 2004, the negative trend
became more prevalent and continued to worsen in early 2005. In 2005, the current year trend was
negative and the trend for future years was negative and deteriorating.

Ms. Linda Cvrkel

Division of Corporation Finance

Securities and Exchange Commission

September 14, 2005

Page 5 of 6

GMNA Volume — Historical Analysis" -->

DRI GMNA Volume — Historical Analysis

    Actual

    Forecast

    2002

    2003

    2004

    2005

    2006

    CY

    CY

    Q1

    Q2

    Q3

    Q4

    CY

    CY

    CY

    July 2003 DRI

    5,529

    5,278

    1,361

    1,428

    1,199

    1,298

    5,286

    4,941

    4,824

    Actual

    5,529

    5,342

    1,315

    1,331

    1,156

    1,219

    5,022

    n/a

    n/a

    1.2%

    -3.4%

    -6.8%

    -3.6%

    -6.0%

    -5.0%

    Meeting
expectations, Q1 lower than expectation, but no negative trend

    Negative trend develops

    Volumes continue to decline

    Actual

    Forecast

    2003

    2004

    2005

    2006

    2007

    CY

    CY

    Q1

    Q2

    Q3

    Q4

    CY

    CY

    CY

    July 2004 DRI

    5,342

    5,101

    1,305

    1,337

    1,181

    1,264

    5,086

    5,063

    4,974

    Actual

    5,342

    5,022

    1,122

    1,188

    n/a

    n/a

    n/a

    n/a

    n/a

    -1.6%

    -14.0%

    -11.1%

    Volumes continue to decline

    Actual

    Forecast

    2004

    2005

    2006

    2007

    2008

    CY

    CY

    Q1

    Q2

    Q3

    Q4

    CY

    CY

    CY

    July 2005 DRI

    5,022

    4,592

    1,155

    1,201

    1,057

    1,131

    4,544

    4,438

    4,401

    Volumes not coming back - no recovery

Conclusion:

-At 12/2003 DRI indicated stable GMNA production for 2004 with modest decline in 2005/2006. GMNA had
overproduced versus 2003 DRI. Accordingly, no reason to expect significant GMNA volume risk.

-During 2H 2004, GMNA production begins to weaken, although total production still exceeds 5.0 million units for
CY 2004. DRI is projecting 2005/2006 production to be stable with 2004.

-In 1H 2005 GM management makes decision to reduce GMNA production to address market share decline. Reduces
Q1 2005 production by 14% and Q2 by 11% versus DRI. GM revises CY 2005 GMNA production schedule to 4.5 M
units — 10% below 2004 actual production and DRI.

-Post-mortem note: In July 2005, DRI reduces 2006 - 2008 GMNA production volumes to 4.5 M units or less.

Summary: