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 April 30, 1999

                                       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 May 31, 1999, 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
TRANSPORTATION  CORP. 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>







                                        1
                         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 Six Months Ended April 30, 1999 and 1998......  2

            Statements of Consolidated Financial Condition --
            April 30, 1999; October 31, 1998; and April 30, 1998...........  3

            Statements of Consolidated Cash Flow --
            Six Months Ended April 30, 1999 and 1998.......................  4

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

   Item 2.  Management's Discussion and Analysis of Results of
            Operations and Financial Condition.............................  8


PART II.    OTHER INFORMATION

   Item 6.  Exhibits and Reports on Form 8-K............................... 14

Signature      ............................................................ 14


<PAGE>



                                        4
                         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>
<CAPTION>
                                          Three Months Ended   Six Months Ended
                                                April 30            April 30
                                          ------------------   ----------------
                                           1999       1998      1999      1998
                                          ------     ------    ------    -----
Revenue
<S>                                       <C>        <C>       <C>      <C>
   Retail notes and lease financing  . . .$ 37.3     $ 30.9    $ 76.8   $ 59.8
   Wholesale notes . . . . . . . . . . . .  16.3       11.5      31.0     19.8
   Accounts  . . . . . . . . . . . . . . .   9.2        7.1      17.5     16.7
   Servicing fee income  . . . . . . . . .   5.5        5.0      11.7     10.7
   Insurance premiums earned . . . . . . .   8.5        8.0      17.0     15.9
   Marketable securities . . . . . . . . .   2.4        1.6       4.4      3.8
                                          ------     ------    ------   ------
           Total . . . . . . . . . . . . .  79.2       64.1     158.4    126.7
                                          ------     ------    ------   ------


Expense
   Cost of borrowing:
         Interest  . . . . . . . . . . . .  21.5       20.3      43.7     36.0
         Other . . . . . . . . . . . . . .   1.5        1.6       3.2      3.5
                                          ------     ------    ------   ------
           Total . . . . . . . . . . . . .  23.0       21.9      46.9     39.5

   Credit, collection and administrative .  10.7        8.5      20.8     16.6
   Provision for losses on receivables . .   1.9        0.8       3.2      1.2
   Insurance claims and underwriting . . .   9.1        8.0      19.4     17.1
   Depreciation and other. . . . . . . . .  10.6        7.6      20.5     13.1
                                          ------     ------    ------   ------
           Total . . . . . . . . . . . . .  55.3       46.8     110.8     87.5
                                          ------     ------    ------   ------


Income Before Taxes on Income  . . . . . .  23.9       17.3      47.6     39.2

Taxes on Income  . . . . . . . . . . . . .   8.9        6.6      18.1     15.1
                                          ------     ------    ------   ------

Net Income . . . . . . . . . . . . . . . .  15.0       10.7      29.5     24.1

Retained Earnings

   Beginning of period . . . . . . . . . . 111.5      114.5     109.0    113.1

   Dividends paid  . . . . . . . . . . . .  13.0       15.0      25.0     27.0
                                          ------     ------    ------   ------

   End of period . . . . . . . . . . . . .$113.5     $110.2    $113.5   $110.2
                                          ======     ======    ======   ======
</TABLE>


See Notes to Consolidated Financial Statements.


<PAGE>


                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES
           STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION (Unaudited)
                              (Millions of dollars)
<TABLE>
<CAPTION>
                                          April 30    October 31     April 30
                                           1999          1998          1998
               ASSETS
<S>                                       <C>         <C>            <C>
Cash and Cash Equivalents . . . . . . . . $   13.0    $    14.1      $   39.2
Marketable Securities . . . . . . . . . .    103.5        108.0         113.3

Finance Receivables
     Retail notes and lease financing . .  1,025.1        915.9         772.4
     Wholesale notes  . . . . . . . . . .    452.7        224.9         308.0
     Accounts . . . . . . . . . . . . . .    471.6        382.9         379.3
                                          --------     --------      --------
                                           1,949.4      1,523.7       1,459.7
     Allowance for losses . . . . . . . .    (13.5)       (12.8)        (12.2)
                                          --------     --------      --------
         Finance Receivables, Net . . . .  1,935.9      1,510.9       1,447.5

Amounts Due from Sales of Receivables . .    237.8        245.9         211.1
Equipment on Operating Leases, Net  . . .    236.0        217.7         198.9
Repossessions . . . . . . . . . . . . . .     19.6         14.4          13.8
Other Assets  . . . . . . . . . . . . . .    105.6        101.9          93.7
                                          --------     --------      --------
Total Assets  . . . . . . . . . . . . . . $2,651.4     $2,212.9      $2,117.5
                                          ========     ========      ========

   LIABILITIES AND SHAREOWNER'S EQUITY


Short-Term Borrowings . . . . . . . . . . $   15.0     $   21.8     $   138.4
Accounts Payable to Affiliates. . . . . .    564.9        136.8          84.0
Other Liabilities . . . . . . . . . . . .     51.9         57.1          49.9
Senior and Subordinated Debt  . . . . . .  1,631.2      1,611.2       1,453.4
Dealers' Reserves . . . . . . . . . . . .     24.4         24.0          23.2
Unpaid Insurance Claims and
  Unearned Premiums . . . . . . . . . . .     78.2         80.5          82.4

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  . . . . . . . . .    113.5        109.0         110.2
     Accumulated other comprehensive
      income  . . . . . . . . . . . . . .      1.3          1.5           5.0
                                          --------     --------      --------
         Total  . . . . . . . . . . . . .   285.8         281.5         286.2
                                          --------     --------      --------
Total Liabilities and
  Shareowner's Equity . . . . . . . . . . $2,651.4     $2,212.9      $2,117.5
                                          ========     ========      ========

</TABLE>

See Notes to Consolidated Financial Statements.



<PAGE>


                 NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES
                STATEMENTS OF CONSOLIDATED CASH FLOW (Unaudited)
                              (Millions of dollars)
<TABLE>
<CAPTION>

                                                         Six Months Ended
                                                             April 30
                                                        1999              1998
Cash Flow From Operations
<S>                                                    <C>             <C>
     Net income . . . . . . . . . . . . . . . . . . .  $ 29.5          $ 24.1
     Adjustments to reconcile net income to cash
         provided from operations:
         Gains on sales of receivables  . . . . . . .    (5.7)           (7.2)
         Depreciation and amortization  . . . . . . .    22.0            15.2
         Provision for losses on receivables  . . . .     3.2             1.2
         Increase (decrease) in accounts
           payable to affiliates. . . . . . . . . . .   428.1           (47.5)
         Other  . . . . . . . . . . . . . . . . . . .   (13.0)           (9.7)
                                                       ------          ------
             Total  . . . . . . . . . . . . . . . . .   464.1           (23.9)
                                                       ------          ------

Cash Flow From Investing Activities
   Proceeds from sold retail notes  . . . . . . . . .   511.6           465.3
     Purchase of retail notes and
       lease receivables  . . . . . . . . . . . . . .  (662.2)         (576.4)
     Principal collections on retail notes and
       lease receivables  . . . . . . . . . . . . . .    31.5            54.8
     Acquisitions over cash collections of wholesale
       notes and accounts receivable  . . . . . . . .  (299.1)         (153.8)
     Purchase of marketable securities  . . . . . . .   (20.7)          (15.8)
     Proceeds from sales and maturities
       of marketable securities . . . . . . . . . . .    26.1            19.3
     Purchase of equipment leased to others . . . . .   (46.6)          (90.9)
     Sale of equipment leased to others . . . . . . .     7.7             2.7
                                                       ------          ------
             Total  . . . . . . . . . . . . . . . . .  (451.7)         (294.8)
                                                       ------          ------

Cash Flow From Financing Activities
     Net decrease in short-term debt . . . . . . . .     (6.8)           (2.6)
     Net increase in bank revolving
      credit facility usage. . . . . . . . . . . . .     40.0           302.0
     Net increase in asset-backed
      commercial paper facility usage. . . . . . . .     11.3            12.1
     Proceeds from long-term debt  . . . . . . . . .     73.3            91.5
     Principal payments of long-term debt  . . . . .   (106.3)          (28.8)
     Dividends paid to Transportation  . . . . . . .    (25.0)          (27.0)
                                                       ------          ------
             Total   . . . . . . . . . . . . . . . .    (13.5)          347.2
                                                       ------          ------

(Decrease) Increase in Cash and Cash Equivalents . .     (1.1)           28.5

Cash and Cash Equivalents at Beginning of Period . .     14.1            10.7
                                                       ------          ------

Cash and Cash Equivalents at End of Period . . . . .   $ 13.0          $ 39.2
                                                       ======          ======

Supplemental disclosure of cash flow information

     Interest paid . . . . . . . . . . . . . . . . .   $ 49.4          $ 37.9
                                                       ======          ======

     Income taxes paid . . . . . . . . . . . . . . .  $  15.3          $ 19.5
                                                      =======          ======

</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").     Navistar     International     Transportation    Corp.
     ("Transportation"),   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 the accounting policies described in the Corporation's 1998
     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 position and cash flow
     for the interim  periods  presented.  Interim  results are not  necessarily
     indicative  of  results to be  expected  for the full  year.  Certain  1998
     amounts have been reclassified to conform with the presentation used in the
     1999 financial statements.


2.   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>
                                       April 30      October 31      April 30
                                         1999           1998           1998
                                                    ($ Millions)
<S>                                    <C>            <C>            <C>
   Retail notes . . . . . . . . . .    $1,493.4       $1,445.4       $1,417.7
   Wholesale notes  . . . . . . . .       600.0          700.0          500.0
                                       --------       --------       --------
         Total  . . . . . . . . . .    $2,093.4       $2,145.4       $1,917.7
                                       ========       ========       ========
</TABLE>

     In November 1998, the Corporation  sold $545  million of retail notes,  net
     of unearned finance income,  through Navistar  Financial Retail Receivables
     Corporation ("NFRRC"),  a wholly owned subsidiary of the Corporation,  to a
     multi-seller  asset-backed  commercial  paper conduit  sponsored by a major
     financial institution. A gain of $6 million was recognized on the sale. The
     proceeds of $526 million, net of fees and credit enhancements, were used by
     the Corporation for general working capital purposes.

     In June 1999,  the  Corporation  sold $715 million of retail notes,  net of
     unearned  finance  income,  through NFRRC to an owner trust which,  in turn
     sold notes to investors.  A gain of $6 million was  recognized on the sale.
     The  proceeds  of  $685  million,  net  of  underwriting  fees  and  credit
     enhancements,  were used by the  Corporation  for general  working  capital
     purposes.


<PAGE>

                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


   The allowance for losses on receivables is summarized as follows:
<TABLE>
<CAPTION>
                                        April 30      October 31    April 30
                                          1999           1998          1998
                                                     ($ Millions)
   Allowance pertaining to:
<S>                                        <C>           <C>           <C>
       Owned notes . . . . . . . . .       $13.5         $12.8         $12.2
       Sold notes  . . . . . . . . .        12.7          12.6          12.5
                                           -----         -----         -----
          Total  . . . . . . . . . .       $26.2         $25.4         $24.7
                                           =====         =====         =====
</TABLE>


3.     In  anticipation  of the  June  1999  sale  of  retail  receivables,  the
       Corporation  was a party to a total of $500  million of forward  treasury
       locks. The Corporation  closed these positions on the pricing date of the
       sale.  The resulting $2 million gain was included in the gain on the sale
       of receivables recognized in June 1999.

       In November 1998, the Corporation sold fixed rate retail receivables on a
       variable rate basis.  For the  protection of investors,  the  Corporation
       issued an  interest  rate cap.  Under  the  terms of the  agreement,  the
       Corporation  will make payments if interest rates exceed certain  levels.
       The  notional   amount  of  the  cap  amortizes  based  on  the  expected
       outstanding principal balance of the sold retail receivables. As of April
       30, 1999 the notional  amount was $490 million and the interest  rate cap
       had a fair value of $2 million.

4.     In order to facilitate the securitization of the Corporation's retail and
       wholesale  receivables the Corporation has  established,  over the years,
       three  special  purpose  corporations  (Navistar   Financial   Securities
       Corporation,  Navistar Financial Retail Receivables Corporation and Truck
       Retail  Instalment Paper  Corporation).  In connection with the sales and
       leasebacks of certain of  its  leasing portfolio assets,  the Corporation
       and its subsidiary,  Harco  Leasing,  Inc.  ("Harco"),  have  established
       Navistar Leasing Company ("NLC"),  a  Delaware  business trust. NLC holds
       legal title to  leased  vehicles  and  is  the  lessor  on  substantially
       all leases originated.  The assets of NLC have been and will  continue to
       be allocated into  various  beneficial  interests  issued  by NLC.  Harco
       owns one such beneficial interest in NLC and Harco has transferred  other
       beneficial interests  issued by NLC to  purchasers  under  sale/leaseback
       agreements.  Neither the beneficial  interests  held by purchasers  under
       sale/leaseback agreements and the assets represented  thereby,  nor legal
       interest  in  any  assets  of  NLC,  will  be  available  to  Harco,  the
       Corporation  or its creditors.


<PAGE>


                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

5.     Effective  November  1,  1998,  the  Corporation   adopted  Statement  of
       Financial Accounting Standards No. 130, "Reporting  Comprehensive Income"
       which  establishes  standards for reporting and display of  comprehensive
       income and its  components.  Financial  statements for prior periods have
       been reclassified as required by the statement.  The Corporation's  total
       comprehensive income was as follows:

<TABLE>
<CAPTION>
                                            Three Months           Six Months
                                           Ended April 30        Ended April 30
                                           1999      1998        1999      1998
                                                      ($ Millions)
<S>                                       <C>       <C>         <C>       <C>
       Net Income . . . . . . . . . . . . $15.0     $10.7       $29.5     $24.1
       Unrealized gains (losses) on
         marketable securities  . . . . .   0.0       1.1        (0.2)      1.3
                                          -----     -----       -----     -----
          Total Comprehensive Income. . . $15.0     $11.8       $29.2     $25.3
                                          =====     =====       =====     =====
</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 headings "Year 2000" and "Business Outlook."


Financing Volume

In the first half of fiscal  1999  industry  retail  sales for Class 5 through 8
trucks  was  approximately  21%  higher  than  1998.  The  Corporation's  retail
financing  acquisitions  during the first six months of fiscal  1999,  including
retail notes and finance and operating leases, were $709 million, 6% higher than
1998. The increase is primarily the result of the strong truck  industry  demand
offset in part by a decline in the  Corporation's  finance  market  share of new
International  trucks  sold in the U.S.  from  15.9% in 1998 to 15.1% in  fiscal
1999.  The decline in market share is due to the highly  competitive  commercial
financing market. Serviced retail notes and lease financing balances were $2,755
million and $2,394 million at April 30, 1999 and 1998, respectively.

In spite of the continued strong liquidity in the commercial  financing  market,
the  Corporation  provided 96% and 94% of the wholesale  financing of new trucks
sold to  Transportation's  dealers  in the first six  months of fiscal  1999 and
1998,  respectively.  Serviced  wholesale  note balances were $1,150  million at
April 30,  1999,  a 29%  increase  compared  to April 30, 1998 due to the strong
industry demand.


Results of Operations

The  components of net income for the three and six month periods ended April 30
are as follows:

<TABLE>
<CAPTION>
                                              Three Months       Six Months
                                             Ended April 30    Ended April 30
                                             1999      1998     1999     1998
Income before income taxes:
<S>                                         <C>       <C>      <C>      <C>
  Finance operations. . . . . . . . . . .   $22.1     $15.7    $45.7    $36.6
  Insurance operations. . . . . . . . . .     1.8       1.6      1.9      2.6
                                            -----     -----    -----    -----
     Income before taxes. . . . . . . . .    23.9      17.3     47.6     39.2
Taxes on income . . . . . . . . . . . . .     8.9       6.6     18.1     15.1
                                            -----     -----    -----    -----
     Net income . . . . . . . . . . . . .   $15.0     $10.7    $29.5    $24.1
                                            =====     =====    =====    =====
</TABLE>


<PAGE>


                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

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


Results of Operations (continued)

Finance Operations:

During the second quarter of fiscal 1999, the Corporation's pretax income of $24
million was $7 million  higher  than the  corresponding  period of fiscal  1998.
Pretax  income  during the first six months of 1999  increased $8 million to $48
million  compared to the same period of 1998. The  improvement  for both periods
was due  primarily  to higher  finance  receivable  balances  resulting  from an
increase in  Transportation's  sales and a higher  level of average  outstanding
accounts  payable to affiliates which reduced debt levels,  offset,  in part, by
higher costs to service the larger portfolio and an increase in year 2000 costs.

Retail note and lease revenue  increased $17 million to $77 million in the first
half of 1999  compared to 1998.  The increase is primarily  the result of higher
retail  financing  activities and an increase in operating lease balances due to
continued growth in lease financing, offset in part by lower yields. Included in
retail note and lease revenue is operating  lease revenue of $29 million and $20
million in 1999 and 1998,  respectively.  For operating leases,  the Corporation
recognizes the entire lease payment as revenue and records  depreciation expense
on the assets under lease.

Wholesale  note  revenue  increased  to $31  million  in the first  half of 1999
compared  to $20  million in fiscal 1998 due  primarily  to the higher  level of
wholesale financing activity,  offset in part by lower yields in response to the
lower average prime interest rate.

Retail and wholesale  account  revenue was $18 million in the first half of 1999
compared to $17 million in 1998. The increase was primarily the result of higher
average  balances,  offset  in part by lower  yields  in  response  to the lower
average prime interest rate.

Borrowing  costs  increased  $7 million to $47 million  during the first half of
1999 due primarily to higher average receivable funding requirements,  partially
offset  by  lower  average  interest  rates  and the  higher  level  of  average
outstanding accounts payable to affiliates which reduced debt levels. The higher
level of average outstanding  accounts payable to affiliates reduced debt levels
and resulted in a second quarter reduction in borrowing costs of $4 million. The
Corporation's  weighted  average  interest rate on all debt decreased during the
first six months of 1999 to 5.6% from 6.3% in the first  half of 1998  primarily
due to lower average interest rates and the maturity of high yield  subordinated
debt.

Credit,  collection and administrative  expenses increased to $21 million during
the first six months of 1999 from $17 million in 1998.  The increase in 1999 was
primarily  due to  higher  costs to  service  the  larger  portfolio  and  costs
associated with year 2000 initiatives.



<PAGE>


                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

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


Results of Operations (continued)

Finance Operations (continued):

Provision for losses on  receivables  totaled $3 million in the first six months
of 1999 compared with $1 million in 1998. The increase in 1999 was primarily due
to the  increase in serviced  finance  receivable  balances.  The  Corporation's
allowance for losses as a percentage of serviced  finance  receivables was .60%,
 .64% and .68% at April 30, 1999, October 31, 1998 and April 30, 1998.

Depreciation  and other  expenses  during  the first six  months of 1999 was $21
million  compared to $13 million in the comparable  period of 1998. The increase
is primarily  the result of a larger  investment  in equipment  under  operating
leases.

Insurance Operations:

Harco  National  Insurance  Company's  pretax income was $1 million less for the
first six months of fiscal  1999 than during the  comparable  1998  period.  The
decline  was due  primarily  to  adverse  loss  experience  in  liability  lines
partially offset by gains on sales of securities.


Liquidity and Funds Management

The Corporation  has  traditionally  obtained the funds to provide  financing to
Transportation'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.  The  Corporation's
insurance  subsidiary generates its funds through internal operations and has no
external borrowings.

In May 1999,  Moody's and Duff and Phelps raised the  Corporation's  senior debt
ratings from Ba1 and BBB- to Baa3 and BBB, respectively,  while also raising the
subordinated  debt  ratings from Ba3 and BB+ to Ba2 and BBB-,  respectively.  In
January 1998,  Standard and Poors raised the  Corporation's  senior debt ratings
from BB to BB+, while the subordinated  debt ratings were also raised from B+ to
BB-.



<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)

Operations  provided  $464  million  in cash in the  first  six  months  of 1999
primarily as a result of an increase in accounts payable to affiliated companies
and net  income.  Investing  activities  used $452  million in cash  during this
period  principally  as a result  of the  purchase  of  retail  notes  and lease
receivables  and  acquisitions  over cash  collections  of  wholesale  notes and
accounts  receivable,  offset in part by  proceeds  from sold retail  notes.  To
finance the increase in receivable  balances and pay dividends of $25 million to
Transportation,  the  Corporation  increased  its  financing  activities  by $14
million.

Receivable  sales  were a  significant  source of funding in both 1999 and 1998.
Through the  asset-backed  markets,  the Corporation has been able to fund fixed
rate retail note receivables at rates offered to companies with investment grade
ratings.  During the first six months of fiscal 1999, the Corporation  sold $545
million of retail  notes,  net of  unearned  finance  income,  through  Navistar
Financial Retail Receivables  Corporation  ("NFRRC"), a wholly owned subsidiary,
to a multi-seller  asset-backed  commercial  paper conduit  sponsored by a major
financial  institution.   During  the  first  six  months  of  fiscal  1998  the
Corporation  sold $500 million of retail notes,  net of unearned finance income,
through NFRRC, to owner trusts which, in turn, issued securities which were sold
to investors.

In June 1999, the Corporation sold $715 million of retail notes, net of unearned
finance  income,  through NFRRC to an owner trust which,  in turn, sold notes to
investors.  A gain of $6  million  was  recognized  on the sale,  which  will be
reflected in the Corporation's  third quarter revenues.  Following the June 1999
sale of retail receivables,  the remaining shelf registration available to NFRRC
for the public issuance of asset-backed securities was $2,257 million.

As of April 30, 1999, Navistar Financial Securities Corporation,  a wholly-owned
subsidiary  of the  Corporation,  had a  revolving  wholesale  note  trust  that
provides for the funding of $600 million of eligible wholesale notes.

At April 30, 1999,  available  funding under the bank revolving  credit facility
and the  asset-backed  commercial  paper facility was $72 million,  of which $15
million  provided  funding  backup  for the  outstanding  short-term  debt.  The
remaining  $57  million,   when  combined  with   unrestricted   cash  and  cash
equivalents, made $70 million available to fund the general business purposes of
the Corporation.

In anticipation of the June 1999 sale of retail receivables, the Corporation was
a party to a total of $500 million of forward  treasury  locks.  The Corporation
closed these positions on the pricing date of the sale. The resulting $2 million
gain was  included  in the gain on the sale of  receivables  recognized  in June
1999.


<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)

In  November  1998,  the  Corporation  sold fixed rate retail  receivables  on a
variable rate basis. For the protection of investors,  the Corporation issued an
interest rate cap. Under the terms of the agreement,  the Corporation  will make
payments if interest rates exceed certain levels. The notional amount of the cap
amortizes based on the expected outstanding principal balance of the sold retail
receivables.  As of April 30, 1999 the notional  amount was $490 million and the
interest rate cap had a fair value of $2 million.


Year 2000

The  Corporation has identified all significant  information  technology  ("IT")
applications that will require remediation, which in some cases will involve the
replacement of systems,  to ensure Year 2000  compliance.  Internal and external
resources are being used to make the required modifications and to test for Year
2000 compliance. The Corporation plans to complete the modifications and testing
process of all  significant  IT systems  by August  1999,  which is prior to any
anticipated impact on its operating systems.

As of April 30, 1999 the  Corporation  believes it has remediated  approximately
90% of its non-compliant IT systems.  Total costs connected with the remediation
of the Corporation's  significant IT systems during the first six months of 1999
totaled $1.6 million, and for fiscal 1998 and 1997 totaled $3.7 million and $1.1
million, respectively.  Estimated future costs total $1.5 million. Approximately
25% of the total  costs,  representing  investment  in new IT  systems,  will be
capitalized and depreciated over three to five years. The total cost of the Year
2000 project has not had nor is it anticipated to have a material  impact on the
Corporation's  financial  position or results of  operations  and will be funded
through operating cash flows.

While certain aspects of the Corporation's  businesses could operate on a manual
basis  for a  period  of  time,  in the  event  Year  2000  compliance  for  its
significant IT systems is not reached,  the Corporation  currently believes that
the most reasonably likely worst case scenario would be the inability to sustain
its  current  level  of  performance  and  customer  service.   Additionally,  a
significant  failure of the banking  systems or key  entities  in the  financial
markets  could  adversely  affect the  Corporation's  ability to access  various
credit and money markets.  The Corporation is therefore  committed to taking all
appropriate  actions to achieve  Year 2000  compliance  for its  significant  IT
systems  before the  millennium  date change.  The  Corporation  has developed a
detailed plan,  which includes an anticipated  remediation  completion  date for
each  significant IT system and a scheduled  overall  completion  date of August
1999.  Management  reviews the progress under the action plan on a weekly basis.
Whenever  management  concludes a material  risk exists  that a  significant  IT
system will not be  remediated  by the  scheduled  overall  completion  date,  a
contingency plan is developed.



<PAGE>


                         NAVISTAR FINANCIAL CORPORATION
                                AND SUBSIDIARIES

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


Year 2000 (continued)

The Corporation has initiated formal  communications  with all significant third
party  suppliers  which  provide  operational  support  and  non-IT  systems  to
determine the extent to which the  Corporation  would be vulnerable in the event
that one or more of those third  parties fail to  remediate  their own Year 2000
issues. The Corporation has received  assurances from its significant  suppliers
of cash  management  services that they will be able to operate in the Year 2000
and beyond, without interruption in service. While the Corporation believes that
it does not have significant exposure to other significant  suppliers' Year 2000
problems,  it is  seeking  compliance  assurances  from such  other  significant
suppliers.

The costs of the project and the date on which the Corporation  believes it will
complete the Year 2000  remediation  are based on  management's  best estimates,
which were derived utilizing  numerous  assumptions of future events,  including
the continued availability of certain resources,  third party modification plans
and other factors.  However, there can be no guarantee that these estimates will
be achieved and actual results could differ  materially from those  anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the  availability  and cost of qualified  personnel,  the ability to
locate and correct all relevant computer codes and similar uncertainties.


Business Outlook

The  truck  industry  is  forecasted  to  remain  strong  in  fiscal  1999.  The
competitive  commercial  financing  market will  continue to put pressure on the
Corporation's  retail and wholesale  financing  activity and margins.  Increased
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.

Management  believes that collections on the outstanding  receivables  portfolio
plus cash available from the  Corporation's  various funding sources will permit
Navistar  Financial  to meet  the  financing  requirements  of  Transportation's
dealers and retail customers through 1999 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 six months  ended
April 30, 1999.



                                    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 June 11, 1999                       /s/P. E. Cochran
     -------------                       ----------------
                                            P. E. Cochran
                                            Vice President and Controller
                                            (Principal Accounting Officer)