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 July 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 August 31,  2001,  the number of shares  outstanding  of the  registrant's
common stock was 1,600,000.

THE REGISTRANT IS A WHOLLY-OWNED  SUBSIDIARY OF  INTERNATIONAL  TRUCK AND ENGINE
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 and Nine Months Ended July 31, 2001 and 2000.........  2

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

           Statements of Consolidated Cash Flow --
           Nine Months Ended July 31, 2001 and 2000..........................  4

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

   Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations............................... 12


PART II.   OTHER INFORMATION

   Item 6. Exhibits and Reports on Form 8-K.................................. 16

Signature  .................................................................. 16

<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)

<TABLE>
<S>                                                     <C>             <C>                  <C>          <C>
                                                           Three Months Ended                   Nine Months Ended
                                                                July 31                             July 31
                                                        2001                2000              2001        2000
Revenue

    Retail note financing...........................    $ 14.9          $ 17.8               $ 63.6       $ 49.4
    Lease financing.................................      24.7            23.4                 74.8         68.2
    Wholesale notes.................................      10.6            17.0                 35.7         52.6
    Accounts........................................       7.5            10.9                 22.8         34.3
    Servicing fee income............................       8.1             8.8                 24.4         23.3
    Marketable securities...........................       5.2            (0.7)                18.5          0.2
           Total....................................      71.0            77.2                239.8        228.0

Expense
    Cost of borrowing:
        Interest expense............................      20.8            26.8                 75.6         73.8
        Other.......................................       2.3             1.5                  6.8          4.4
           Total....................................      23.1            28.3                 82.4         78.2

    Credit, collection and administrative...........      12.0             9.9                 35.3         32.5
    Provision for losses on receivables.............       6.1             3.0                 20.2          6.7
    Depreciation expense and other..................      14.8            13.0                 45.1         39.0
           Total....................................      56.0            54.2                183.0        156.4

Income Before Taxes.................................      15.0            23.0                 56.8         71.6

Taxes on Income.....................................       5.7             8.9                 21.9         27.4

Income from Continuing Operations...................       9.3            14.1                 34.9         44.2

Income from Discontinued Operations,
     (net of tax of $0.0 and $(0.7) )...............          -            0.1                    -          1.4

Net Income..........................................       9.3            14.2                 34.9         45.6

Retained Earnings

    Beginning of period.............................     134.5           129.6                134.9        111.2

    Dividends paid..................................          -           (6.0)               (26.0)       (19.0)

    End of period...................................    $143.8          $137.8               $143.8       $137.8

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>

                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES
           STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION (Unaudited)
                              (Millions of dollars)

<TABLE>
<S>                                                         <C>                  <C>                  <C>
                                                           July 31             October 31            July 31
                                                             2001                 2000                 2000
                                                       -----------------    -----------------    -----------------
   ASSETS

   Cash and Cash Equivalents                                $   40.6             $   41.6             $   86.0

   Finance Receivables
       Retail note financing.........................          364.0              1,050.5                714.8
       Lease financing...............................          216.8                223.7                218.0
       Wholesale notes...............................           43.1                 82.3                106.1
       Accounts......................................          135.2                322.5                336.5
                                                               759.1              1,679.0              1,375.4

       Allowance for losses..........................          (10.4)               (12.9)               (11.2)
           Finance Receivables, Net..................          748.7              1,666.1              1,364.2

   Amounts Due from Sales of Receivables.............          416.5                316.5                335.1
   Net Investment in Operating Leases................          285.6                291.1                314.6
   Repossessions.....................................           70.5                 42.4                 42.0
   Restricted Marketable Securities..................          399.9                 85.2                 37.5
   Other Assets......................................           30.0                 27.2                 21.4
   Net Assets of Discontinued Operations.............           48.8                 48.8                 60.5
   Total Assets......................................       $2,040.6             $2,518.9             $2,261.3

   LIABILITIES AND SHAREOWNER'S EQUITY

   Net Accounts Payable to Affiliates................       $  128.7             $  266.4             $   73.1
   Other Liabilities.................................           65.3                 50.0                 51.0
   Senior and Subordinated Debt......................        1,511.4              1,874.0              1,806.0
   Dealers' Reserves.................................           22.3                 24.1                 24.7

   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.............................          143.8                134.9                137.8
   Accumulated other comprehensive loss..............           (1.9)                (1.5)                (2.3)
           Total.....................................          312.9                304.4                306.5
   Total Liabilities and Shareowner's Equity                $2,040.6             $2,518.9             $2,261.3
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>


                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES
                STATEMENTS OF CONSOLIDATED CASH FLOW (Unaudited)
                              (Millions of dollars)
                                Nine Months Ended
<TABLE>
<S>                                                                    <C>                <C>
                                                                                   July 31
                                                                       ---------------------------------
                                                                           2001               2000
                                                                       --------------     --------------
   Cash Flow From Continuing Operations
        Net income....................................................   $ 34.9             $ 44.2
       Adjustments to reconcile net income to cash
           used by operations:
           Gains on sales of receivables.............................     (20.5)              (2.5)
           Depreciation and amortization.............................      46.4               41.2
           Provision for losses on receivables.......................      20.2                6.7
           Decrease in net accounts payable to affiliates............    (137.7)            (635.6)
           Other.....................................................       3.1                4.4
              Total..................................................     (53.6)            (541.6)

   Cash Flow From Investing Activities
       Proceeds from sold retail notes...............................   1,190.3              973.7
       Purchase of retail notes and lease receivables................    (663.3)            (980.4)
       Principal collections on retail notes and
           lease receivables.........................................      15.6               55.6
       Net (decrease)increase in revolving wholesale
          note trust.................................................    (211.9)             358.5
       Acquisitions under cash collections of
           wholesale notes and accounts receivable...................     369.5              174.0
       Proceeds from sold retail accounts receivable.................      89.1                  -
       Purchase of equipment leased to others........................     (85.4)             (69.2)
       Sale of equipment leased to others............................      48.4               18.1
           Total.....................................................     752.3              530.3

   Cash Flow From Financing Activities
       Net decrease in short term borrowings.........................         -              (34.5)
       Net (decrease)increase in bank revolving credit
           facility usage............................................    (354.0)              55.0
       Net decrease in revolving retail warehouse facility...........    (314.8)
       Net increase in asset-backed commercial paper
           facility usage............................................         -               15.0
       Proceeds from long-term debt..................................      93.8              102.9
       Principal payments of long-term debt..........................     (98.8)             (62.0)
       Dividends paid to International...............................     (26.0)             (19.0)
           Total.....................................................    (699.8)              57.4

   (Decrease) increase in Cash and Cash Equivalents from
      Continuing Operations..........................................      (1.1)              46.1
   Net Cash from Discontinued Operations.............................       0.1                0.9
   Cash and Cash Equivalents at Beginning of Period                        41.6               39.0
   Cash and Cash Equivalents at End of Period                           $  40.6             $ 86.0

   Supplemental disclosure of cash flow information
       Interest paid.................................................   $  87.3             $ 76.8
       Income taxes paid.............................................   $  10.6             $ 28.8
See Notes to Consolidated Financial Statements.
</TABLE>
<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.

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.
<PAGE>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


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 July 31, 2001, the Corporation has three interest rate swap agreements and
three interest rate caps  outstanding.  One of the swap agreements is classified
as a cash flow hedge  derivative  instrument.  The fair value of this derivative
instrument as of July 31, 2001 is recorded in Other Liabilities in the Statement
of Consolidated Financial Condition and the change in fair value for the quarter
and nine months then ended was  recorded in other  comprehensive  income and was
not material. The remaining instruments are classified as non-hedging derivative
instruments.  The fair value of these derivative instruments as of July 31, 2001
are recorded in Other  Liabilities  in the Statement of  Consolidated  Financial
Condition  and the  changes in fair value for the  quarter  and nine months then
ended were recorded in retail note revenue and were not material.

3.  On  November  30,  2000,  the  Corporation's  Board  of  Directors  approved
management's plan for the sale of Harco National Insurance Company ("Harco"),  a
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.

4. On April 1, 2001 the Corporation  adopted  Statement of Financial  Accounting
Standards No. 140  "Accounting  for Transfers and Servicing of Financial  Assets
and Extinguishments of Liabilities".  The adoption of this statement has not had
and is not expected to have a material  effect on the  Corporation's  results of
operations,  financial  condition  or  cash  flows.  We  have  included  certain
disclosures below to comply with the requirements of this new statement.
<PAGE>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


The Corporation  securitizes and sells  receivables  through Navistar  Financial
Retail  Receivables   Corporation   ("NFRRC"),   Navistar  Financial  Securities
Corporation  ("NFSC"),  Truck  Retail  Accounts  Corporation  ("TRAC") and Truck
Engine  Receivables  Financing  Corporation  ("TERFCO"),  all  special  purpose,
wholly-owned subsidiaries of the Corporation.  NFRRC, NFSC, TRAC and TERFCO have
limited  recourse on the sold  receivables  and their  assets are  available  to
satisfy the claims of their creditors  prior to such assets  becoming  available
for their own uses or to the Corporation or affiliated  companies.  The terms of
receivable  sales  generally  require the  Corporation to maintain cash reserves
with the trusts and  conduits as credit  enhancement.  The use of cash  reserves
held by the trusts and conduits is restricted under the terms of the securitized
sales  agreements.  The maximum  exposure  under all  receivable  sale  recourse
provisions at July 31, 2001 was $436.1 million; however, management believes the
recorded reserves for losses are adequate.

The Corporation continues to service the receivables,  for which a servicing fee
is received.  Servicing fees are earned on a level yield basis over the terms of
the related sold receivables and are included in servicing fee income. Servicing
fees are typically set at 1.0% of average  outstanding net receivable  balances,
representing the Corporation's estimated costs to service the receivables.

Gains or losses on sales of  receivables  are dependent  upon the purchase price
being  allocated  between the  carrying  value of the  receivables  sold and the
retained interests based upon their relative fair values. We estimate fair value
based upon the present value of future expected cash flows using assumptions for
prepayment  speeds and current market  interest  rates.  These  assumptions  use
management's  best  estimates  commensurate  with the risks  involved.  Gains or
losses are credited or charged to  financing  revenue in the period in which the
sales occur.  An allowance for credit losses is provided prior to the receivable
sale and is reclassified to Amounts Due from Sales of Receivables upon sale.

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:

                                  July 31           October 31         July 31
                                    2001               2000             2000
                               -------------      --------------    ------------
                                                ($ Millions)

Retail notes.................      $2,222.7            $1,730.2         $1,975.8
Wholesale notes..............         671.0               883.0            959.3
Retail accounts..............         139.9                80.0                -
    Total....................      $3,033.6            $2,693.2         $2,935.1


<PAGE>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


The allowance for losses on serviced receivables is summarized as follows:

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

     Total allowance for losses at beginning of period...        $26.2            $26.2               $26.2
     Provision for losses..................................       20.2             12.1                 6.7
     Credit losses net of recoveries.......................      (16.4)           (12.1)               (6.7)
     Total allowance for losses at end of period...........
                                                                 $30.0            $26.2               $26.2

</TABLE>

Additional  financial data for gross serviced finance receivables as of July 31,
2001 is as follows:
<TABLE>
<S>                                                 <C>             <C>                 <C>               <C>
                                                   Retail                           Wholesale
                                                    Notes           Leases             Notes           Accounts
                                                -------------    ------------     ---------------    --------------
                                                                          ($ Millions)

      Gross serviced finance receivables.........   $2,897.7        $540.2              $844.4            $304.2
      Gross serviced finance receivables with
      Installments past due
          over 30 days...........................                                         14.1              27.6
          over 60 days...........................       34.5          12.8

      Credit losses net of recoveries............       14.7           1.4                 0.3               0.0

</TABLE>


In the first half of fiscal 2001, in three separate sales,  the Corporation sold
$1,365 million of retail notes, net of unearned  finance income,  through NFRRC.
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.  In April
2001, the Corporation sold $310 million of retail notes to an owner trust which,
in turn,  issued  $400  million  of  asset-backed  securities  that were sold to
investors. The Corporation sold an additional $90 million of retail notes to the
same owner trust in the third quarter of 2001.  Aggregate gains of $20.5 million
were recognized on the sales.
<PAGE>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


At July 31,  2001,  NFSC has in place a  revolving  wholesale  note  trust  that
provides for the funding of $1,012 million of eligible  wholesale  notes.  As of
July 31, 2001 the trust 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 $200 million of variable funding certificates
which mature in 2002.  TERFCO has in place a revolving  trust that  provides for
the funding of $100 million of eligible Ford accounts  receivables.  TRAC has in
place a revolving  retail account  conduit that provides for the funding of $100
million of eligible retail accounts.

When  receivables are sold, the Corporation  retains interest in the securitized
receivables in the form of interest-only strips,  servicing rights, cash reserve
accounts and subordinated  certificates.  The following is a summary of retained
interests included in Amounts Due from Sales of Receivables:

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

      Cash held and invested by trusts..................    $173.6              $136.6                $154.3
      Subordinated retained interests in wholesale
      receivables.......................................     126.8               142.5                 155.7
      Subordinated retained interests in retail
      receivables.......................................     121.5                50.6                  38.7
      Interest only receivables.........................      14.2                 0.1                   1.4
      Allowance for credit losses.......................     (19.6)              (13.3)                (15.0)
         Total..........................................    $416.5              $316.5                $335.1
</TABLE>

The  fair  value  of cash  deposits  included  in  amounts  due  from  sales  of
receivables  approximate their carrying value due to their short-term nature and
variable interest rate terms. The subordinated  retained  interests in wholesale
and retail receivables  principally  consist of wholesale notes, retail accounts
and certain  cash  collections  on finance  receivables.  Due to the  short-term
nature of these  assets the fair value  approximates  carrying  value.  The fair
value of the  interest  only  receivables  are derived by  discounting  expected
future cash flows at estimated current market rates.
<PAGE>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Key economic  assumptions  used in measuring the interest only strip at the date
of the securitization for  securitizations  completed during the fiscal year and
at July 31, 2001 for all outstanding securitizations, were as follows:

                                               At date of          At July 31,
                                             Securitization           2001
                                          ------------------   ----------------

   Prepayment speed.......................     1.4.-.1.6          1.4 - 1.6
   Weighted average remaining
   life...............................         41 months          28 months
   Residual cash flows discount rate......  7.85%.- 9.61%       7.85% - 9.61%


The impact of  hypothetical  10% and 20%  adverse  changes in these  assumptions
would have no material effect on the fair value of the interest only receivables
at July 31, 2001. These  sensitivities  are hypothetical and should be used with
caution. The effect of a variation of a particular  assumption on the fair value
of the  interest  only  receivables  is  calculated  without  changing any other
assumption; in reality, changes in one factor may result in changes in another.

The following  table  summarizes  certain cash flows received from and (paid to)
securitization trusts/conduits during the nine months ended July 31, 2001:
<TABLE>
<S>                                                                           <C>
                                                                              ($ Millions)
                                                                             ---------------
   Proceeds from initial sales of receivables...............................    $1,390.4
   Proceeds from subsequent sales of receivables into revolving facilities..     3,822.8
   Servicing fees received..................................................        24.4
   All other cash received from trusts......................................       111.8
   Purchase of delinquent or foreclosed receivables.........................       (73.4)
   Cash used for pool buybacks..............................................      (188.1)
</TABLE>


5. In  November  2000,  the  Corporation  established  TERFCO 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
November 2005. As of July 31, 2001 the  Corporation  has utilized $71 million of
this facility.

<PAGE>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


On October  16,  2000  Truck  Retail  Instalment  Paper  Corporation,  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 receivable 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.

6. 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  are permitted to borrow up to $100 million in the
aggregate,  which  will be  guaranteed  by the  Corporation  and  Navistar.  The
short-term  liquidity facility,  which provided for aggregate  borrowings of $80
million, was terminated in June 2001.

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

<TABLE>
<S>                                                       <C>         <C>               <C>          <C>
                                                             Three Months                  Nine Months
                                                            Ended July 31                 Ended July 31
                                                          2001         2000            2001          2000
                                                        ------------ ----------      ------------- -----------
                                                                            ($ Millions)

 Net Income .......................................     $ 9.3        $14.2            $34.9        $45.6
 Changes in unrealized gains (losses) on marketable
 securities........................................         -          0.1                -         (0.4)
 Unrealized net gain (loss) on derivative contracts      (0.4)           -             (0.4)           -
    Total Comprehensive Income.....................     $ 8.9        $14.3            $34.5        $45.2
</TABLE>
<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 nine months of fiscal  2001  industry  retail  sales of Class 5 through 8
trucks  were  approximately  31%  lower  than  2000.  The  Corporation's  retail
financing  acquisitions in fiscal 2001,  including  retail notes and finance and
operating  leases,  were $749  million,  29% lower than 2000.  The  decrease was
primarily  due to a  reduction  in industry  retail  sales and a decrease in the
Corporation's  finance market share of new International trucks sold in the U.S.
to 15.6% in 2001 from  16.4% in fiscal  2000.  Serviced  retail  notes and lease
financing  balances were $3,089  million and $3,223 million at July 31, 2001 and
2000, respectively.

The  Corporation  provided 96% of the wholesale  financing of new trucks sold to
International's  dealers  in the first  nine  months  of  fiscal  2001 and 2000.
Serviced  wholesale  note  balances  were $843  million at July 31,  2001, a 31%
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

Pre-tax  income was $15 million in the third  quarter of fiscal 2001 compared to
$23 million in 2000.  The decrease  was  primarily  the result of higher  retail
losses and lower average wholesale and account  balances.  Pretax income was $57
million  and $72  million  in the first  nine  months  of fiscal  2001 and 2000,
respectively.  The decrease was primarily the result of higher retail losses and
lower average wholesale and account balances offset, in part, by higher gains on
sales of retail note receivables.

Retail note  financing  revenue was $64 million in the first nine months of 2001
compared to $49 million in 2000.  The increase is primarily the result of higher
gains on sales of retail note  receivables.  Gains on the sales were $21 million
on $1,365 million of retail note receivables and $3 million on $1,008 million of
retail  note  receivables  in the first  nine  months  of fiscal  2001 and 2000,
respectively.  The higher gains on sales resulted  primarily from higher margins
on retail notes. During a declining interest rate environment, the Corporation's
acquisition  spreads  improve  as  borrowing  costs  differ  from the time  when
interest rates are quoted to borrowers and the time when notes are acquired.
<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 $75  million  in the  first  nine  months of 2001
compared to $68 million in 2000.  The increase is primarily the result of higher
average lease financing balances.

Wholesale  note  revenue was $36 million in the first nine months of fiscal 2001
compared to $53  million in 2000.  The  decrease is  primarily a result of lower
average serviced wholesale balances.

Retail and wholesale account revenue was $23 million in the first nine months of
2001  compared to $34 million in fiscal  2000.  The  decrease is  primarily  the
result of lower average serviced balances.

Marketable  securities  revenue was $19 million in the first nine months of 2001
compared to less than $1 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 $4 million to $82 million during the first nine months
of 2001  primarily  due to the lower  average  outstanding  accounts  payable to
affiliates and an increase in the  outstanding  balance of the revolving  retail
warehouse facility. The Corporation's weighted average interest rate on all debt
decreased to 6.0% in the first nine months of 2001 from 6.3% in 2000 as a result
of lower LIBOR rates, offset by slightly increased credit spreads.

Provision  for losses on  receivables  totaled  $20  million  for the first nine
months  of 2001  compared  to $7  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 .71%, .54% and .55% at July 31, 2001,  October
31, 2000 and July 31, 2000, respectively.

Depreciation  and other  expenses  were $45  million in the first nine months of
2001 from $39 million in 2000.  The increase is  primarily  the result of higher
depreciation on a larger average 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.

In May 2001, Moody's and Fitch lowered the Corporation's  senior debt ratings to
Ba1  and  BBB-  from  Baa3  and  BBB.  Fitch  also  lowered  the   Corporation's
subordinated debt ratings to BB from BBB-.

Operations  used $54 million in cash in the first nine months of 2001  primarily
as a  result  of the  decrease  of  $139  million  in net  accounts  payable  to
affiliates.  Financing  activities  used  $700  million  to  decrease  the  bank
revolving credit facility and the revolving  retail  warehouse  facility by $669
million and to pay dividends of $26 million. To fund the cash used by operations
and financing  activities,  investing  activities  provided $752 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.

In the  first  nine  months  of  fiscal  2001,  in  three  separate  sales,  the
Corporation sold $1,365 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.  The  Corporation  also sold $310
million of retail notes, in April 2001, to an owner trust which, in turn, issued
$400 million of  asset-backed  securities  that were sold to  investors.  In the
third quarter of 2001, the Corporation  sold an additional $90 million of retail
notes, net of unearned finance income, to the same owner trust.  Aggregate gains
of $21 million were  recognized  on the sales.  At July 31, 2001,  the remaining
shelf  registration  available to NFRRC for the public  issuance of asset-backed
securities was $618 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 November 2005. As of July 31, 2001 the  Corporation  has utilized $71 million
of this facility.
<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)

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 July 31, 2001
the Corporation has utilized $69 million of this facility.  The facility expires
in August 2002 with an option for renewal.

At July 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 July 31, 2001, NFSC has
utilized  $671  million of the  revolving  wholesale  note  trust.  In the third
quarter  2001,  the  Corporation   lowered  the  outstanding   variable  funding
certificates held by NFSC from $75 million to $0 million.

At July 31, 2001,  available funding under the bank revolving credit facilities,
the revolving retail warehouse  facility and the revolving  wholesale note trust
was $899 million.  When combined with  unrestricted  cash and cash  equivalents,
$940  million  was  available  to fund  the  general  business  purposes  of the
Corporation.

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>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES


                           PART II - OTHER INFORMATION


Item 6.        Exhibits and Reports on Form 8-K


No reports on Form 8-K were filed during the three months ended July 31, 2001.




                                    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 September 13, 2001                       /s/R. D. Markle
                                                  R. D. Markle
                                                  Vice President and Controller
                                                  (Principal Accounting Officer)