Exhibit 10.21


                      NAVISTAR 1998 SUPPLEMENTAL STOCK PLAN



                                    SECTION I
                               PURPOSE OF THE PLAN

     The purpose of this  Navistar 1998  Supplemental  Stock Plan ("Plan") is to
provide an  additional  plan for the  issuance of stock  options and  restricted
stock for shares of the common stock of Navistar  International  Corporation  to
employees   of  Navistar   International   Corporation   and  its   subsidiaries
("Corporation") to attract and retain highly qualified personnel, to provide key
employees who hold  positions of major  responsibility  the  opportunity to earn
incentive awards  commensurate with the quality of individual  performance,  the
achievement  of  performance  goals and  ultimately  the increase in  shareowner
value.  This Plan is separate from and intended to supplement  the Navistar 1994
Performance  Incentive  Plan  ("1994  Plan").  The Plan  replaces  the  Navistar
International  Corporation 1998 Interim Stock Plan for grants or awards of stock
made on and after the date of adoption of this Plan.



                                   SECTION II
                                   DEFINITIONS

     The  terms  used in this Plan are  defined  as  specified  in the 1994 Plan
unless the context indicates to the contrary.



                                   SECTION III
                                   ELIGIBILITY

     Management  will, from time to time,  select and recommend to the Committee
on   Compensation   and  Governance  of  the  Board  of  Directors  of  Navistar
International   Corporation   ("Committee")(formerly   named  the  Committee  on
Organization)  Employees who are to become  Participants in the Plan.  Employees
will be selected from those who, in the opinion of management,  have substantial
responsibility in a managerial or professional capacity.  Employees selected for
participation  in the Plan  may  also be  participants  in the  1994  Plan,  and

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participation  in this Plan will not be considered  participation in a plan that
would affect their participation in the 1994 Plan.



                                   SECTION IV
                                  STOCK OPTIONS

     The Committee may grant  Nonqualified  Stock Options to Participants in the
amount and at the time that the Committee  approves.  No Incentive Stock Options
shall be granted under this Plan.  Options shall be granted under the same terms
and  conditions as options  granted under the 1994 Plan, as amended from time to
time,  but subject to the  limitation on the number of shares  contained in this
Plan, and subject to the  limitation  that only treasury  shares,  and not newly
issued shares, may be used for any grant.



                                    SECTION V
                                RESTRICTED SHARES

     The  Committee may award  restricted  shares for the purposes and under the
same terms and  conditions  as specified in Sections VI and VIII,  and the other
provisions  of the 1994 Plan,  but subject to the  limitations  on the number of
shares  contained in this Plan, and subject to the limitation that only treasury
shares,  and not newly issued shares, may be used for any award to an officer of
the Corporation.



                                   SECTION VI
                           ADMINISTRATION OF THE PLAN

     Full power and authority to construe,  interpret and administer the Plan is
vested in the Committee.  Decisions of the Committee  will be final,  conclusive
and  binding  upon all  parties,  including  the  Corporation,  shareowners  and
employees.  The  foregoing  will  include,  but  will  not be  limited  to,  all
determinations  by the  Committee  as to  (i)  the  approval  of  Employees  for
participation in the Plan, (ii) the amount of the Awards,  (iii) the performance
levels at which  different  percentages  of the  Awards  would be earned and all
subsequent  adjustments to such levels and (iv) the determination of all Awards.
Any person who accepts any Award hereunder agrees to accept as final, conclusive
and binding all  determinations  of the  Committee.  The Committee will have the
right, in the case of employees not employed in the United States,  to vary from
the provision of the Plan to the extent the Committee deems appropriate in order
to preserve the incentive features of the Plan.

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                                   SECTION VII
                     MODIFICATION, AMENDMENT OR TERMINATION

     The Committee  may modify  without the consent of the  Participant  (i) the
Plan,  (ii) the terms of any  option  previously  granted  or (iii) the terms of
Restricted  Shares  previously  awarded  at any  time,  provided  that,  no such
modification  will,  without  the  approval  of the  Board of  Directors  of the
Corporation,  increase the number of shares of Common Stock available hereunder.
The Committee may terminate the Plan at any time.



                                  SECTION VIII
                              RESERVATION OF SHARES

     The total  number of shares of stock  reserved and  available  for delivery
pursuant  to  this  Plan  is 2  million  shares  of  common  stock  of  Navistar
International Corporation.  The number of shares reserved and available shall be
increased  by shares of stock  subject to an option or award  under this Plan or
any  other  plan  that is  cancelled,  expired,  forfeited,  settled  in cash or
otherwise  terminated  without a delivery  of shares to the  participant  of the
plan,  including  shares  used to pay the  option  exercised  price of an option
issued  under the Plan or any other plan or to pay taxes with respect to such an
option.  Only treasury shares,  and not newly issued shares, may be reserved and
made available for delivery.



                                   SECTION IX
                                TERM OF THE PLAN

     The  Plan  shall  be  effective  on the date of  adoption  by the  Board of
Directors and continue through December 16, 2003.



                                    SECTION X
                                  GOVERNING LAW

     The Plan will be  governed by and  interpreted  pursuant to the laws of the
State of Delaware, the place of incorporation of the Corporation.

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