UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

            X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended January 31, 2001

                                       OR

            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from to
                                      ----
                                   ----------
                         Commission File Number 1-4146-1
                                   ----------

                         NAVISTAR FINANCIAL CORPORATION
                    ----------------------------------------
             (Exact name of Registrant as specified in its charter)


           Delaware                             36-2472404
-------------------------------           ----------------------
(State or other jurisdiction of      (I.R.S. Employer Identification No.)
 incorporation or organization)


2850 West Golf Road Rolling Meadows, Illinois                60008
---------------------------------------------               -------
  (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number including area code 847-734-4000

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  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

                       APPLICABLE ONLY TO ISSUERS INVOLVED
                        IN BANKRUPTCY PROCEEDINGS DURING

                            THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12, 13 or 15 (d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes No -

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

As of February 28, 2001, the number of shares  outstanding  of the  registrant's
common stock was 1,600,000.

THE   REGISTRANT  IS  A  WHOLLY-OWNED   SUBSIDIARY  OF  NAVISTAR   INTERNATIONAL
CORPORATION AND MEETS THE CONDITIONS SET FORTH IN GENERAL  INSTRUCTIONS  H(1)(a)
AND (b) OF FORM  10-Q  AND IS  THEREFORE  FILING  THIS  FORM  WITH  THE  REDUCED
DISCLOSURE FORMAT.


<PAGE>





                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                                      INDEX

                                                                       Page

PART I.   FINANCIAL INFORMATION

   Item 1.   Financial Statements:

      Statements of Consolidated Income and Retained Earnings --
        Three Months Ended January 31, 2001 and 2000. . . . . . . . . .  2

      Statements  of  Consolidated  Financial  Condition  -- January  31,  2001;
        October 31, 2000; and January 31, 2000. . . . . . . . . . . . .  3

      Statements of Consolidated Cash Flow --
        Three Months Ended January 31, 2001 and 2000. . . . . . . . . .  4

      Notes to Consolidated Financial Statements  . . . . . . . . . . .  5

   Item 2.   Management's Discussion and Analysis of Results of
                Operations and Financial Condition. . . . . . . . . . .  9


PART II.   OTHER INFORMATION

   Item 6.   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 13

Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Index of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . E-1


<PAGE>



                         PART I - FINANCIAL INFORMATION

      Item 1.   Financial Statements

                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES

       STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS (Unaudited)
       -------------------------------------------------------------------
                              (Millions of dollars)

                                                    Three Months Ended
                                                        January 31
                                               ------------------------------
                                                      2001          2000
                                                      ---- -        ----
Revenue

    Retail note financing................           $ 21.7         $ 16.4
    Lease financing......................             25.8           22.2
    Wholesale notes......................             13.2           19.0
    Accounts.............................              8.7           11.3
    Servicing fee income.................              8.2            6.8
    Marketable securities................              7.7            0.5
                                                    ------         ------
           Total.........................             85.3           76.2
                                                    ------         ------

Expense
    Cost of borrowing:

        Interest expense.......................       30.0           24.0
        Other..................................        1.7            1.5
                                                    ------         ------
           Total...............................       31.7           25.5

    Credit, collection and administrative......       10.9           10.9
    Provision for losses on receivables........        6.5            1.4
    Depreciation expense and other.............       15.4           12.9
                                                    ------         ------
           Total...............................       64.5           50.7
                                                    ------         ------

Income Before Taxes............................       20.8           25.5

Taxes on Income................................        8.0            9.5
                                                    ------         ------

Income from Continuing Operations..............       12.8           16.0

Income from Discontinued Operations,

     (net of tax of $0.0 and $(0.7) )..........          -            1.2
                                                     ------        ------

Net Income.....................................       12.8           17.2

Retained Earnings

    Beginning of period........................      134.9          111.2

    Dividends paid.............................          -           (7.0)
                                                     ------        ------

    End of period..............................     $147.7         $121.4
                                                    ======         ======



See Notes to Consolidated Financial Statements.


<PAGE>




                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES

           STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION (Unaudited)
           ----------------------------------------------------------
                              (Millions of dollars)

<TABLE>
<CAPTION>
<S>                                                          <C>                  <C>                  <C>
                                                     January 31           October 31           January 31
                                                        2001                 2000                 2000
                                                   ----------------     ----------------    -----------------
                                ASSETS

Cash and Cash Equivalents.........................      $   81.8             $   41.6            $   60.3

Finance Receivables

    Retail note financing.........................         323.8              1,050.5               546.0
    Lease financing...............................         222.4                223.7               192.8
    Wholesale notes...............................          58.4                 82.3               223.0
    Accounts......................................         217.1                322.5               528.1
                                                        --------             --------            --------
                                                           821.7              1,679.0             1,489.9
    Allowance for losses..........................          (8.8)               (12.9)              (11.1)
                                                        --------             --------            --------
        Finance Receivables, Net..................         812.9              1,666.1             1,478.8

Amounts Due from Sales of Receivables.............         356.8                316.5               328.4
Net Investment in Operating Leases................         308.7                291.1               267.1
Repossessions.....................................          55.2                 42.4                24.7
Restricted Marketable Securities..................         394.9                 85.2                35.3
Other Assets......................................          26.7                 27.2                22.1
Net Assets of Discontinued Operations.............          48.8                 48.8                60.1
                                                        --------              -------            --------
Total Assets......................................      $2,085.8             $2,518.9            $2,276.8
                                                        ========             ========            ========

                  LIABILITIES AND SHAREOWNER'S EQUITY

Short-Term Debt..................................       $     -              $     -             $   25.0
Net Accounts Payable to Affiliates...............           15.2                266.4               204.6
Other Liabilities................................           58.1                 50.0                53.8
Senior and Subordinated Debt.....................        1,671.6              1,874.0             1,680.3
Dealers' Reserves................................           23.7                 24.1                24.4

Shareowner's Equity

    Capital stock (Par value $1.00, 1,600,000
        shares issued and outstanding)
        and paid-in capital......................          171.0                171.0               171.0
    Retained earnings............................          147.7                134.9               121.4
Accumulated other comprehensive loss.............           (1.5)                (1.5)               (3.7)
                                                        --------             --------            --------
        Total....................................          317.2                304.4               288.7
                                                        --------             --------            --------
Total Liabilities and Shareowner's Equity........       $2,085.8             $2,518.9            $2,276.8
                                                        ========             ========            ========
</TABLE>



See Notes to Consolidated Financial Statements.


<PAGE>



                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES

                STATEMENTS OF CONSOLIDATED CASH FLOW (Unaudited)
                ------------------------------------------------
                              (Millions of dollars)

<TABLE>
<CAPTION>
                                                                               Three Months Ended
                                                                                   January 31

                                                                        ---------------------------------
<S>                                                                         <C>                <C>
                                                                            2001               2000
                                                                        -------------      --------------
Cash Flow From Continuing Operations

    Net income...................................................       $  12.8            $  17.2
    Adjustments to reconcile net income to cash
        used by operations:
        Gains on sales of receivables............................          (9.2)              (2.2)
        Depreciation and amortization............................          16.0               13.4
        Provision for losses on receivables......................           6.5                1.4
        Decrease in net accounts payable to affiliates...........        (251.2)            (502.0)
        Other....................................................           6.6                2.0
                                                                        -------            -------
           Total.................................................        (218.5)            (470.2)
                                                                        -------            -------

Cash Flow From Investing Activities

    Proceeds from sold retail notes..............................         894.4              496.1
    Purchase of retail notes and lease receivables...............        (225.5)            (263.3)
    Principal collections on retail notes and
        lease receivables........................................          (0.7)              26.3
    Proceeds from sold wholesale notes...........................         (91.5)             300.0
    Acquisitions under (over) cash collections of wholesale
        notes and accounts receivable............................         123.8              (62.6)
    Proceeds from sold retail accounts receivable                         105.0                  -
    Purchase of equipment leased to others.......................         (51.4)             (18.8)
    Sale of equipment leased to others...........................          19.0                5.7
                                                                        -------            -------
        Total....................................................         773.1              483.4
                                                                        -------            -------

Cash Flow From Financing Activities

    Net decrease in short term debt..............................             -               (9.5)
    Net (decrease)increase in bank revolving credit
        facility usage...........................................        (215.0)              85.0
    Net decrease in revolving retail warehouse facility..........        (309.7)                 -
    Net decrease in asset-backed commercial paper
        facility usage...........................................             -              (79.6)
    Proceeds from long-term debt.................................          51.6               41.4
    Principal payments of long-term debt.........................         (42.2)             (23.7)
    Dividends paid to International..............................             -               (7.0)
                                                                        -------            -------
        Total....................................................        (515.3)               6.6
                                                                        -------            -------

Increase in Cash and Cash Equivalents from

   Continuing Operations.........................................          39.3               19.8
Net Cash from Discontinued Operations............................           0.9                1.5
Cash and Cash Equivalents at Beginning of Period.................          41.6               39.0
                                                                        -------            -------
Cash and Cash Equivalents at End of Period.......................       $  81.8            $  60.3
                                                                        =======            =======

Supplemental disclosure of cash flow information

    Interest paid................................................       $  34.8            $  28.2
                                                                        =======            =======
    Income taxes paid............................................       $  (3.5)           $   1.8
                                                                        =======            =======
</TABLE>


See Notes to Consolidated Financial Statements.


<PAGE>




                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1.    The  consolidated  financial  statements  include the accounts of Navistar
      Financial   Corporation   ("NFC")   and  its   wholly-owned   subsidiaries
      ("Corporation").    International    Truck    and    Engine    Corporation
      ("International"),   which  is  wholly-owned  by  Navistar   International
      Corporation ("Navistar"), is the parent company of the Corporation.

      The  accompanying  unaudited  financial  statements  have been prepared in
      accordance with accounting  policies  described in the Corporation's  2000
      Annual  Report on Form 10-K and  should  be read in  conjunction  with the
      disclosures therein.

      In the opinion of management,  these interim financial  statements reflect
      all  adjustments,  consisting of normal recurring  accruals,  necessary to
      present  fairly the results of  operations,  financial  condition and cash
      flow  for  the  interim  periods   presented.   Interim  results  are  not
      necessarily  indicative  of  results  to be  expected  for the full  year.
      Certain  2000  amounts  have  been   reclassified   to  conform  with  the
      presentation used in the 2001 financial statements.

2.    On  November 1, 2000, the  Corporation  adopted   Statement  of  Financial
      Accounting Standards No. 133  "Accounting  for Derivative  Instruments and
      Hedging   Activities,"  as  amended  (SFAS  133).  In  November  2000, the
      cumulative transition adjustment recorded upon adoption was not material.

      The  Corporation  uses  derivative  financial  instruments  as part of its
      overall interest rate risk management  strategy as further described under
      Footnote 13 of the 2000 Annual Report on Form 10-K.

      The  Corporation  is exposed to interest  rate risk relating to changes in
      market interest rates. As part of its overall strategy to manage the level
      of exposure to the risk of interest rates adversely affecting net interest
      income or expense,  the  Corporation  uses interest rate swap  agreements,
      interest  rate caps,  and forward  contracts.  The  Corporation  also uses
      derivative  instruments on occasion to make possible  financing under sold
      note  arrangements  with third parties in asset-backed  transactions.  The
      Corporation's policy prohibits the use of derivative financial instruments
      for speculative purposes.


<PAGE>




                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

      On the date the Corporation enters into a derivative contract,  management
      designates the derivative as either a hedging or a non-hedging instrument.
      Additionally,   management   distinguishes   between  fair  value  hedging
      instruments,   cash  flow  hedging   instruments,   and  other  derivative
      instruments.

      The  Corporation   documents  and  accounts  for  derivative  and  hedging
      activities in accordance with the provisions of SFAS 133. In general, SFAS
      133  requires  that an  entity  recognize  all  derivatives  as  assets or
      liabilities  in the  statement of  financial condition and measure them at
      fair value.  When certain  criteria are met, it also provides for matching
      the  timing  of  gain  or  loss  recognition  on  the  derivative  hedging
      instrument  with the  recognition of (a) changes in the fair value or cash
      flows of the hedged asset or liability  attributable to the hedged risk or
      (b) the earnings effect of the hedged forecasted  transaction.  Changes in
      the fair value of derivatives  which are not designated as or which do not
      qualify as hedges for accounting purposes are reported in earnings.

      As of  January  31,  2001,  the  Corporation  has two  interest  rate swap
      agreements and three interest rate caps outstanding. These instruments are
      classified as non-hedging derivative instruments.  The fair value of these
      derivatives  as of January  31,  2001 and the change in fair value for the
      quarter  then ended were  recorded  in retail  note  revenue  and were not
      material.

      In  September  2000,  the  Financial  Accounting  Standards  Board  issued
      Statement of  Financial  Accounting  Standards  No. 140,  "Accounting  for
      Transfers  and  Servicing  of  Financial  Assets  and  Extinguishments  of
      Liabilities"   which  the  Corporation   must  adopt  for  all  applicable
      transactions  occurring after March 31, 2001. The Corporation is currently
      assessing  the impact of this  standard  on the  Corporation's  results of
      operations, financial condition and cash flows.

3.    On November  30,  2000,  the  Corporation's  Board of  Directors  approved
      management's  plan  for  the  sale of  Harco  National  Insurance  Company
      ("Harco"),  the  wholly-owned  insurance  subsidiary.  The Harco insurance
      segment is accounted for as a  discontinued  operation,  and  accordingly,
      amounts in the consolidated financial statements and notes thereto for all
      periods  shown  have been  restated  to  reflect  discontinued  operations
      accounting.


<PAGE>



                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

4.    Finance  receivable  balances do  not  include  receivables  sold  by  the
      Corporation  to  public  and  private  investors  with  limited   recourse
      provisions.  Outstanding  sold  receivable  balances  are  as  follows:

<TABLE>
<CAPTION>
<S>                                              <C>                  <C>                  <C>
                                         January 31           October 31           January 31
                                            2001                 2000                 2000
                                     -----------------    ------------------    ----------------
                                                          ($ Millions)

       Retail notes..................      $2,401.4              $1,730.2             $1,986.5
       Wholesale notes...............         791.5                 883.0                900.0
       Retail accounts...............         185.0                  80.0                    -
                                           --------              --------              -------
          Total......................      $3,377.9              $2,693.2             $2,886.5
                                           ========              ========             ========


      The allowance for losses on receivables is summarized as follows:

                                         January 31          October 31           January 31
                                            2001                 2000                 2000
                                      ----------------    ------------------    ----------------
                                                              ($ Millions)
    Allowance pertaining to:
       Owned receivables. . . . . .           $ 8.8                 $12.9                $11.1
       Sold receivables . . . . . .            18.6                  13.3                 15.1
                                              -----                 -----                -----
           Total. . . . . . . . . .           $27.4                 $26.2                $26.2
                                              =====                 =====                =====
</TABLE>


      In  the  first  quarter  of  fiscal  2001,  in  two  separate  sales,  the
      Corporation  sold $965 million of retail  notes,  net of unearned  finance
      income,  through Navistar  Financial  Retail  Receivables  Corporation,  a
      special  purpose,  wholly-  owned  subsidiary  of  the  Corporation.   The
      Corporation sold $765 million of retail notes in November 2000 to an owner
      trust which, in turn,  issued  securities which were sold to investors and
      $200  million  of  retail  notes  in  December  2000  to  a   multi-seller
      asset-backed  commercial  paper  conduit  sponsored  by a major  financial
      institution. Aggregate gains of $9.2 million were recognized on the sales.

      In the second quarter of fiscal 2001, the Corporation entered into a total
      of $50  million  of  forward  treasury  locks and $50  million  of forward
      starting swaps. These derivative instruments will be closed in conjunction
      with  the  pricing  of the  anticipated  May  2001  sale  of  retail  note
      receivables.


<PAGE>



                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

      In November 2000, the  Corporation  established  Truck Engine  Receivables
      Financing Corporation,  a special purpose,  wholly-owned subsidiary of the
      Corporation,  for the purpose of securitizing engine accounts  receivable.
      On November 21, 2000,  the  Corporation  securitized  all of its unsecured
      trade  receivables  generated  by the sale of diesel  engines  and  engine
      service parts from  International  to Ford Motor Company.  The transaction
      provides  for funding of $100  million and expires in 2006.  As of January
      31, 2001 the Corporation has utilized $100 million of this facility.

5.    On October 16, 2000 Truck Retail Instalment Paper Corporation  ("TRIP"), a
      special purpose,  wholly-owned subsidiary of the Corporation,  issued $475
      million  of a senior  class AAA rated and $25  million  of a  subordinated
      class A rated floating rate asset-backed  notes. The proceeds were used to
      purchase  eligible  receivables  from  the  Corporation  and  establish  a
      revolving retail warehouse facility for the Corporation's retail notes and
      retail  leases,  other than fair market value leases.  The  Corporation is
      required  to  maintain  the  revolving  retail  warehouse   facility  with
      collateral  in the amount of $500  million.  In the event that retail note
      balances  pledged to the revolving  retail  warehouse  facility fall below
      $500 million,  the excess proceeds are invested in marketable  securities,
      which are restricted and have maturities of three months or less.

      On December 8, 2000, the  Corporation  renegotiated  its revolving  credit
      facility  and added a short-term  liquidity  facility.  The new  revolving
      credit facility provides for aggregate borrowings of $820 million and will
      mature  in  November  2005.  Under  this new  revolving  credit  facility,
      Navistar's three Mexican finance  subsidiaries will be permitted to borrow
      up to $100  million  in the  aggregate,  which will be  guaranteed  by the
      Corporation and Navistar.  The short-term  liquidity facility provides for
      aggregate borrowings of $80 million and will mature December 7, 2001.

6.    The Corporation's total comprehensive income was as follows:

                                                   Three Months Ended January 31
                                                    2001                   2000
                                                   ------                 ------
                                                            ($ Millions)

      Net Income. . . . . . . . . . . . . . .      $12.8                  $17.2
      Changes in unrealized gains/(losses) on
        marketable securities . . . . . . . .          -                  (1.8)
                                                   -----                 -----
         Total Comprehensive Income . . . . .      $12.8                  $15.4
                                                   =====                  =====




<PAGE>




                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
          AND FINANCIAL CONDITION

Certain  statements under this caption,  which involve risks and  uncertainties,
constitute  "forward-looking   statements"  under  the  Securities  Reform  Act.
Navistar Financial  Corporation's  actual results may differ  significantly from
the results  discussed in such  forward-looking  statements.  Factors that might
cause such a difference  include,  but are not limited to, those discussed under
the heading "Business Outlook."

Financing Volume

In the first quarter of fiscal 2001  industry  retail sales of Class 5 through 8
trucks  were  approximately  30%  lower  than  2000.  The  Corporation's  retail
financing  acquisitions in fiscal 2001,  including  retail notes and finance and
operating  leases,  were $277  million,  2% lower than 2000.  The  decrease  was
primarily  due to a reduction in industry  retail sales  offset,  in part, by an
increase in the Corporation's  finance market share of new International  trucks
sold in the U.S.  to 16.9% in 2001 from 12.3% in fiscal  2000.  Serviced  retail
notes and lease  financing  balances were $3,256  million and $2,993  million at
January 31, 2001 and 2000, respectively.

The  Corporation  provided 96% of the wholesale  financing of new trucks sold to
International's  dealers in the first quarter of fiscal 2001 and 2000.  Serviced
wholesale  note  balances  were $991 million at January 31, 2001, a 22% decrease
compared to the same period of 2000. The decrease is primarily due to a decrease
in dealer inventory levels in response to lower industry retail sales.

Results of Continuing Operations

Pretax income was $20.8 million and $25.5 million in the first quarter of fiscal
2001 and 2000,  respectively.  The decrease was  primarily  the result of higher
retail losses and lower average  wholesale  balances offset,  in part, by higher
gains on sales of retail note receivables.

Retail note  financing  revenue was $21.7  million in the first  quarter of 2001
compared  to $16.4  million in 2000.  The  increase is  primarily  the result of
higher gains on sales of retail note  receivables.  Gains on the sales of retail
note  receivables  were $9.2  million and $2.2  million in the first  quarter of
fiscal 2001 and 2000, respectively.


<PAGE>



                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
          AND FINANCIAL CONDITION (continued)

Results of Continuing Operations (continued)

Lease financing  revenue was $25.8 million in the first quarter of 2001 compared
to $22.2  million in 2000.  The  increase is  primarily  the result of continued
growth in lease financing.

Wholesale  note  revenue was $13.2  million in the first  quarter of fiscal 2001
compared to $19.0  million in 2000.  The decrease is primarily a result of lower
average serviced wholesale balances and an increase in sold note lender interest
due to higher average sold wholesale note balances.

Retail and  wholesale  account  revenue was $8.7 million in the first quarter of
2001  compared to $11.3  million in fiscal 2000.  The decrease is primarily  the
result of lower  average  serviced  balances and an increase in sold  receivable
lender interest due to higher average sold receivable balances.

Servicing  fee income was $8.2 million in the first  quarter of 2001 compared to
$6.8 million in 2000.  The increase was primarily  the result of higher  average
sold receivable balances.

Marketable  securities  revenue  was $7.7  million in the first  quarter of 2001
compared to $0.5  million in 2000.  The  increase  was  primarily  the result of
earnings on restricted  marketable  securities held as collateral for borrowings
under the revolving retail warehouse facility.

Borrowing costs increased $6.2 million to $31.7 million during the first quarter
of 2001  primarily  due to the lower  average  outstanding  accounts  payable to
affiliates and an increase in the  Corporation's  weighted average interest rate
on all debt to 6.9% in first  quarter  of 2001  from  6.2% in 2000.  The  higher
average  interest rates are the result of the slightly higher spreads on the new
revolving credit facility and the new revolving retail warehouse facility and an
increase in average market interest rates.

Provision for losses on  receivables  totaled $6.5 million for the first quarter
of 2001 compared to $1.4 million in 2000. The increase in 2001 was primarily due
to an increase in repossession  frequency and pricing pressure in the used truck
market.  The  Corporation's  allowance  for losses as a  percentage  of serviced
finance  receivables  was .59%,  .54% and .55% at January 31, 2001,  October 31,
2000 and January 31, 2000, respectively.

Depreciation and other expenses  increased to $15.4 million in the first quarter
of 2001 from $12.9  million in 2000.  The  increase is  primarily  the result of
higher depreciation on a larger investment in equipment under operating leases.


<PAGE>



                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
          AND FINANCIAL CONDITION (continued)

Liquidity and Funds Management

The Corporation  has  traditionally  obtained the funds to provide  financing to
International's  dealers and retail customers from sales of finance receivables,
commercial paper, short and long-term bank borrowings, medium and long-term debt
and equity capital.  The  Corporation's  current debt ratings have made sales of
finance receivables the most economical source of funding.

Operations used $218.5 million in cash in the first quarter of 2001 primarily as
a result of the decrease of $251.2 million in accounts payable to affiliates. To
fund the cash used for operations,  investing activities provided $773.1 million
in cash during this period  primarily  as a result of the sale of retail  notes,
offset by the  purchases  of  retail  notes  and  lease  receivables.  Financing
activities  used $515.3 million to decrease the bank revolving  credit  facility
and the revolving retail warehouse facility.

In the first quarter of fiscal 2001, in two separate sales, the Corporation sold
$965 million of retail notes, net of unearned  finance income,  through Navistar
Financial Retail Receivables  Corporation ("NFRRC"), a special purpose,  wholly-
owned subsidiary of the Corporation. The Corporation sold $765 million of retail
notes in November 2000 to an owner trust which, in turn, issued securities which
were sold to investors  and $200  million of retail notes in December  2000 to a
multi-seller   asset-backed  commercial  paper  conduit  sponsored  by  a  major
financial  institution.  Aggregate  gains of $9.2 million were recognized on the
sales. At January 31, 2001, the remaining shelf registration  available to NFRRC
for the public issuance of asset-backed securities was $1,018 million.

In November 2000, the Corporation established Truck Engine Receivables Financing
Corporation, a special purpose,  wholly-owned subsidiary of the Corporation, for
the purpose of securitizing  engine accounts  receivable.  On November 21, 2000,
the Corporation  securitized all of its unsecured trade receivables generated by
the sale of diesel engines and engine service parts from  International  to Ford
Motor Company.  The transaction provides for funding of $100 million and expires
in 2006.  As of January 31, 2001 the  Corporation  has utilized  $100 million of
this facility.

Truck Retail Accounts Corporation, a special purpose, wholly-owned subsidiary of
the  Corporation,  has in place a revolving retail account conduit that provides
for the funding of $100 million of eligible retail  accounts.  As of January 31,
2001 the  Corporation  has utilized $85 million of this  facility.  The facility
expires in August 2001 with an option for renewal.


<PAGE>



                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
          AND FINANCIAL CONDITION (continued)

Liquidity and Funds Management (continued)

At January 31, 2001,  Navistar  Financial  Securities  Corporation  ("NFSC"),  a
special  purpose,  wholly-owned  subsidiary of the  Corporation,  has in place a
revolving  wholesale  note trust that provides for the funding of $1,012 million
of eligible  wholesale  notes. It is comprised of three $200 million tranches of
investor certificates maturing in 2003, 2004 and 2008, a $212 million tranche of
investor  certificates maturing in 2005 and variable funding certificates with a
maximum  capacity of $200 million  maturing in January  2002.  As of January 31,
2001, NFSC has utilized $792 million of the revolving wholesale note trust.

At  January  31,  2001,  available  funding  under  the  bank  revolving  credit
facilities and the revolving retail warehouse facility was $517.5 million.  When
combined  with  unrestricted  cash  and cash  equivalents,  $599.3  million  was
available to fund the general business purposes of the Corporation.

In the second  quarter of fiscal 2001, the  Corporation  entered into a total of
$50 million of forward treasury locks and $50 million of forward starting swaps.
These  derivative  instruments will be closed in conjunction with the pricing of
the anticipated May 2001 sale of retail note receivables.

Business Outlook

The truck  industry in 2001 is  forecasted  to decrease  approximately  31% from
2000.  Volatility in the capital markets is likely to put additional pressure on
the funding rates offered to the Corporation in the asset-backed  public market,
commercial paper markets and other debt financing  markets.  Additionally,  high
fuel  costs may  further  impact the  financial  strength  of the  Corporation's
customers  and the  Corporation's  ability  to  maintain  the  current  level of
portfolio quality.

Management  believes that collections on the outstanding  receivables  portfolio
plus cash available from the  Corporation's  various funding sources will permit
Navistar   Financial   Corporation  to  meet  the  financing   requirements   of
International's dealers and retail customers through 2001 and beyond.


<PAGE>



PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K


Exhibits, Including Those Incorporated By Reference

          See Index to Exhibits.



The  Registrant  filed the following  report on Form 8-K during the three months
ended January 31, 2001:

(i) Form 8-K dated  November  6, 2000,  discussed  several  current  events.  It
referenced the  securitization of the retail accounts,  the new revolving retail
warehouse  facility,  the  November  2000 retail  receivables  issuance in asset
backed  securities,  the plan to securitize  unsecured trade receivables and the
plan to enter into a new credit agreement.

                                    SIGNATURE

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

                                             Navistar Financial Corporation

                                                       (Registrant)






Date  March 15, 2001                         /s/Ronald D. Markle
      --------------                         -------------------
                                                  Ronald D. Markle
                                                  Vice President and Controller
                                                  (Principal Accounting Officer)


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                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES



                                INDEX TO EXHIBITS

      The following documents of Navistar Financial Corporation are incorporated
herein by attachment:

10.01    Servicing   Agreement  dated  as  of  October  16,  2000,  between  the
         Corporation,  as Servicer,  and  Navistar  Leasing  Corporation,  Harco
         Leasing Company,  Inc., Truck Retail Instalment Paper Corp, The Bank of
         New York as Collateral  Agent,  and Bank One National  Association,  as
         Portfolio Trustee.

10.02    Receivables  Purchase  Agreement  dated as of October 16, 2000, between
         Truck Retail Instalment Paper Corp. and the Corporation.

10.03    Indenture Agreement dated as of October 16, 2000,  between Truck Retail
         Instalment  Paper  Corp.,  as  Issuer,  and  The  Bank  of New York, as
         Indenture Trustee.

10.04    Series 2000-1 Supplement dated as of October 16, 2000, to the Indenture
         also dated October 16,  2000  between  Truck  Retail  Instalment  Paper
         Corp., as Issuer, and The Bank of New York, as Indenture Trustee.

10.05    Credit Agreement for  $820,000,000  Revolving  Credit  and  Competitive
         Advance Facility dated as of December 8, 2000, between the Corporation,
         Arrendadora  Financiera  Navistar,  S.A. DE C.V., Servicios Financieros
         Navistar,  S.A. DE C.V.  and  Navistar  Comercial,  S.A.  DE  C.V.,  as
         borrowers,   lenders   party   hereto,  The  Chase  Manhattan  Bank  as
         Administrative Agent,  Bank of America as Syndication Agent and Bank of
         Nova Scotia as Documentation Agent.

10.06    Parents  Side  Agreement,  dated as of  December  8, 2000,  by Navistar
         International   Corporation,   and   International   Truck  and  Engine
         Corporation,  for the benefit of the Lenders from time to time party to
         the Credit Agreement referred to above.

10.07    Guarantee, dated as of December 8, 2000, made by Navistar International
         Corporation,  in favor of The Chase Manhattan  Bank, as  Administrative
         Agent,  for the lenders parties to the Credit Agreement,  dated  as  of
         December 8, 2000,  among Navistar Financial Corporation and Arrendadora
         Financiera Navistar,  S.A.  DE  C.V., Servicios  Financieros  Navistar,
         S.A. DE C.V. and Navistar  Comercial,  S.A. DE C.V., the Lenders,  Bank
         of America,  N.A., as syndication  agent,  The Bank of Nova Scotia,  as
         documentation agent, and the Administrative Agent.



                                       E-1



<PAGE>



                         NAVISTAR FINANCIAL CORPORATION

                                AND SUBSIDIARIES



                                INDEX TO EXHIBITS

10.08    364-Day  Credit  Agreement for  $80,000,000  364-Day  Revolving  Credit
         Facility,  as  of  December  8,  2000,  between  the  Corporation,   as
         borrowers,   lenders  party  hereto,   The  Chase   Manhattan  Bank  as
         Administrative  Agent, Bank of America,  N.A., as Syndication Agent and
         Bank of Nova Scotia, as Documentation Agent.

10.09    Parents  Side  Agreement,  dated as of  December  8, 2000,  by Navistar
         International   Corporation,   and   International   Truck  and  Engine
         Corporation,  for the benefit of the Lenders from time to time party to
         the Credit Agreement referred to above.



<PAGE>