<PAGE 1>

              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, 1997

                                    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 1-5236

                 NAVISTAR  INTERNATIONAL  TRANSPORTATION  CORP.
                 ----------------------------------------------
            (Exact name of  registrant as specified in its charter)

                      Delaware                            36-1264810
           -------------------------------           -------------------
           (State or other jurisdiction of           (I.R.S. Employer
            incorporation or organization)            Identification No.)

 455 North Cityfront Plaza Drive, Chicago, Illinois         60611
 --------------------------------------------------  -------------------
 (Address of principal executive offices)                 (Zip Code)

    Registrant's telephone number, including area code (312) 836-2000


     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 September 8, 1997, the number of shares outstanding of the
registrant's Common Stock was 1,000.

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 THE FORM 10-Q
AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT. 
<PAGE>
         <PAGE 2>




                      NAVISTAR INTERNATIONAL TRANSPORTATION CORP.
                             AND CONSOLIDATED SUBSIDIARIES
                             -----------------------------


                                         INDEX
                                         -----

                                                             Page
                                                           Reference
                                                           ---------

Part I.  Financial Information:

   Item 1.  Financial Statements:

   Statement of Income --
      Three Months and Nine Months
        Ended July 31, 1997 and 1996 ...................       3

   Statement of Financial Condition --
      July 31, 1997, October 31, 1996 
        and July 31, 1996 ..............................       4

   Statement of Cash Flow --
      Nine Months Ended July 31, 1997 and 1996 .........       5

   Notes to Financial Statements .......................       6

Item 2.  Management's Discussion and Analysis of
         Results of Operations and Financial Condition .      11

Part II. Other Information:

   Item 1.  Legal Proceedings ..........................      16
   Item 6.  Exhibits and Reports on Form 8-K ...........      16

   Signature ...........................................      17

Exhibit 3 ..............................................     E-1
Exhibit 10 .............................................     E-2
<PAGE>
          <PAGE 3>
                             PART I - FINANCIAL INFORMATION
                             ------------------------------
<TABLE>
<CAPTION> 
ITEM 1.  Financial Statements
 
STATEMENT OF INCOME (Unaudited)
----------------------------------------------------------------------------------------
Millions of dollars
----------------------------------------------------------------------------------------
                                             Navistar International Transportation Corp.
                                                    and Consolidated Subsidiaries
                                            -------------------------------------------
                                            Three Months Ended        Nine Months Ended
                                                  July 31                  July 31
                                             ----------------          ----------------
                                              1997      1996            1997      1996
                                             ------    ------          ------    ------
<S>                                          <C>       <C>             <C>       <C>
Sales and revenues
Sales of manufactured products ...........   $1,526    $1,325          $4,259    $4,110
Finance and insurance revenue ............       45        53             133       154
Other income .............................        7         5              18        20
                                             ------    ------          ------    ------
  Total sales and revenues ...............    1,578     1,383           4,410     4,284
                                             ------    ------          ------    ------
Costs and expenses 
Cost of products and services sold .......    1,320     1,159           3,688     3,589
Postretirement benefits ..................       50        52             158       163
Engineering and research expense .........       28        30              90        93
Marketing and administrative expense .....       96        83             266       231
Interest expense .........................       40        43             119       126
Financing charges on sold receivables ....        4         5              16        21
Insurance claims and underwriting expense.       11        12              28        38
                                             ------    ------          ------    ------
  Total costs and expenses ...............    1,549     1,384           4,365     4,261
                                             ------    ------          ------    ------
    Income (loss) before income taxes ....       29        (1)             45        23
    Income tax expense ...................        9         8              24        28
                                             ------    ------          ------    ------
Net income (loss) ........................   $   20    $   (9)         $   21    $   (5)
                                             ======    ======          ======    ======
<FN>
See Notes to Financial Statements.
</TABLE>
<PAGE>
          <PAGE 4>
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL CONDITION (Unaudited)
----------------------------------------------------------------------------------------
Millions of dollars
----------------------------------------------------------------------------------------
                                           Navistar International Transportation Corp.
                                                  and Consolidated Subsidiaries
                                          ----------------------------------------------
                                            July 31          October 31        July 31
                                              1997              1996             1996
                                           ----------        ----------       ----------
<S>                                          <C>               <C>              <C>
ASSETS
-----------------------------------
Cash and cash equivalents .........          $   54            $  204           $   89
Marketable securities .............             127               144              135
                                             ------            ------           ------
                                                181               348              224
Receivables, net ..................           1,372             1,646            1,498
Inventories .......................             498               463              549
Property, net of accumulated
  depreciation and amortization
  of $892, $869 and $823 ..........             772               770              703
Investments and other assets ......             303               211              212
Intangible pension assets .........             267               314              284
                                             ------            ------           ------
Total assets ......................          $3,393            $3,752           $3,470
                                             ======            ======           ======
LIABILITIES AND SHAREOWNER'S EQUITY
-----------------------------------
Liabilities
Accounts payable, principally trade         $   864            $  820           $  741
Debt due Parent Company ...........             944               884            1,023
Debt:
  Manufacturing operations ........              98               115              122
  Financial services operations ...             957             1,305              996
Postretirement benefits liability .           1,221             1,351            1,323
Other liabilities .................             800               806              795
                                             ------            ------           ------
    Total liabilities .............           4,884             5,281            5,000
                                             ------            ------           ------
Commitments and contingencies

Shareowner's equity
Capital Stock
  (1,000 shares issued) ...........             786               786              786
Retained earnings (deficit) .......          (2,277)           (2,315)          (2,316)
                                             ------            ------           ------
    Total shareowner's equity .....          (1,491)           (1,529)          (1,530)
                                             ------            ------           ------
Total liabilities
 and shareowner's equity ..........          $3,393            $3,752           $3,470
                                             ======            ======           ======
<FN>
See Notes to Financial Statements.
</FN>
<PAGE>
           <PAGE 5>
 
</TABLE>
<TABLE>
 <CAPTION>
 STATEMENT OF CASH FLOW (Unaudited)
 --------------------------------------------------------------------------
 For the Nine Months Ended July 31 (Millions of dollars)
 --------------------------------------------------------------------------
                                                    Navistar International
                                                   Transportation Corp. and
                                                  Consolidated Subsidiaries
                                                  -------------------------
                                                     1997            1996
                                                    ------          ------
<S>                                                 <C>             <C>
Cash flow from operations
Net income (loss)  .............................    $   21          $   (5)
Adjustments to reconcile net income
  to cash used in operations:
  Depreciation and amortization ................        89              75
  Other, net ...................................       (50)            (23)
Change in operating assets and liabilities:
  Receivables ..................................       (43)            174
  Inventories ..................................       (40)           (134)
  Prepaid and other current assets .............         3             (12)
  Accounts payable .............................        48            (186)
  Other liabilities ............................      (101)           (165)
                                                    ------          ------
Cash used in operations ........................       (73)           (276)
                                                    ------          ------
Cash flow from investment programs
Purchase of retail notes and lease receivables .      (703)           (844)
Collections/sales of retail notes
   and lease receivables .......................     1,007           1,016
Purchase of marketable securities ..............       (80)           (216)
Sales or maturities of marketable securities ...       104             306
Capital expenditures ...........................       (89)            (72)
Other investment programs, net .................       (22)            (25)
                                                    ------          ------
Cash provided by investment programs ...........       217             165
                                                    ------          ------

Cash flow from financing activities
Issuance of debt ...............................       176               -
Principal payments on debt .....................       (37)           (130)
Net decrease in notes and debt outstanding
  under bank revolving credit facility and
  asset-backed and other commercial paper programs    (494)           (214)
Net increase in loan from Navistar International
  Corporation ..................................        61             102
                                                    ------          ------
Cash used in financing activities ..............      (294)           (242)
                                                    ------          ------
Cash and cash equivalents
  Decrease during the period ...................      (150)           (353)
  At beginning of the year .....................       204             442
                                                    ------          ------
Cash and cash equivalents at end of the period .    $   54          $   89
                                                    ======          ======
<FN>
See Notes to Financial Statements.
</TABLE>
<PAGE>
         <PAGE 6>

  Navistar International Transportation Corp. and Consolidated Subsidiaries
                 Notes to Financial Statements  (Unaudited)

Note A.    Summary of Accounting Policies

     Navistar International Transportation Corp., hereafter referred to as
"the company" and "Transportation" is the wholly owned subsidiary of
Navistar International Corporation, hereafter referred to as "Parent
Company."  The consolidated financial statements include the results of
Transportation's manufacturing operations and its wholly owned financial
services subsidiaries.  The effects of transactions between the
manufacturing and financial services operations have been eliminated to
arrive at the consolidated totals.

     The accompanying unaudited financial statements have been prepared in
accordance with accounting policies described in the 1996 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 financial position, results of operations and cash
flow for the periods presented.  Interim results are not necessarily
indicative of results for the full year.  Certain 1996 amounts have been
reclassified to conform with the presentation used in the 1997 financial
statements. 

Note B.  Supplemental Cash Flow Information

     Consolidated interest payments during the first nine months of 1997
and 1996 were $119 million and $130 million, respectively.

Note C.  Income Taxes

     The Parent Company files a consolidated U.S. federal income tax return
which includes Transportation and its U.S. subsidiaries.  Transportation
has a tax allocation agreement (Tax Agreement) with the Parent Company,
which requires Transportation to compute its separate federal income tax
expense based on its adjusted book income.  Any resulting tax liability is
paid to the Parent Company.  In addition, under the Tax Agreement,
Transportation is required to pay to the Parent Company any tax payments
received from its subsidiaries.  The effect of the Tax Agreement is to
allow the Parent Company rather than Transportation to utilize U.S.
operating losses and loss carryforwards (NOLs) generated in earlier years.

Note D.  Receivables

     On January 1, 1997, Transportation adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," for all applicable
transactions. The new standard did not have a material effect on
Transportation's net income or financial position.
<PAGE>
         <PAGE 7>

  Navistar International Transportation Corp. and Consolidated Subsidiaries
                 Notes to Financial Statements  (Unaudited)

Note E.  Inventories

     Inventories are as follows: 
                                    July 31     October 31     July 31
Millions of dollars                  1997          1996         1996
----------------------------------------------------------------------
Finished products                   $  237        $  242       $  302
Work in process                        129            97          111
Raw materials and supplies             132           124          136
                                    ------        ------       ------
Total inventories                   $  498        $  463       $  549
                                    ======        ======       ======

Note F.  Financial Instruments

     During May through July 1997, Navistar Financial Corporation (NFC)
entered into $100 million of forward starting swaps which begin in October
1997 and expire in July 1999.  NFC also entered into $100 million of
forward interest rate lock agreements on a U.S. Treasury security maturing
in July 1999.  NFC intends to close these positions on the pricing date of
the anticipated November 1997 sale of retail receivables.

     During May 1997, NFC sold $100 million of Senior Subordinated Notes
due June 2002. NFC used the net proceeds of $98 million to repurchase $6
million of its outstanding 1998 Notes and to reduce outstanding
indebtedness under the bank revolving credit facility. 

     During May 1997, NFC sold $500 million of retail notes, realizing net
proceeds of $499 million which were used for working capital purposes.  A
gain of approximately $6 million was recognized on the sale.

     During August 1997, NFC's revolving wholesale note trust issued, to
the public, a $200 million tranche of asset-backed certificates which
matures in August 2003.  The net proceeds of $199 million were used by NFC
for general working capital purposes.

Note G.  Environmental Matters

     In March 1997, the U.S. Department of Justice and Transportation
approved the final consent decree in settlement of a dispute related to the
Wisconsin Steel property which was disclosed in Note 4 to Transportation's
Annual Report on Form 10-K.  In June 1997, Transportation paid $11 million
to the Economic Development Administration in settlement of various
commercial issues and past environmental costs which is consistent with the
estimate of anticipated clean-up costs reported at October 31, 1996.
<PAGE>
         <PAGE 8>

  Navistar International Transportation Corp. and Consolidated Subsidiaries
                 Notes to Financial Statements  (Unaudited)

Note H.  New Accounting Pronouncements

     In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," (SFAS 130) and Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," (SFAS 131).  SFAS 130 establishes standards for reporting and
display of comprehensive income and its components.  SFAS 131 establishes
standards for reporting information about operating segments, and related
disclosures about products and services, geographic areas and major
customers.  The requirements of both statements are effective for fiscal
years beginning after December 15, 1997.  The impact of the adoption of
these statements on the company's financial position and results of
operations has not been fully determined.

Note I.  Subsequent Event

     During August 1997, the company's current master contract with the
United Auto Workers (UAW) was extended through October 1, 2002, and the
company announced plans to build its next generation truck (NGT), pending
approval by the Parent Company's Board of Directors in October.
Implementation of NGT will result in various plant rationalizations and
significant capital and development expenditures.

     The company also entered into a tentative ten year agreement,
effective with model year 2003, to continue to supply Ford Motor Company
with diesel engines for Ford's F-Series pickup trucks and Econoline vans.
<PAGE>
          <PAGE 9>

  Navistar International Transportation Corp. and Consolidated Subsidiaries
                 Notes to Financial Statements  (Unaudited)

Note J.  Supplemental Financial Information
<TABLE>
<CAPTION>

Navistar International Transportation Corp. (with financial services
operations on an equity basis) in millions of dollars:

                                          Three Months Ended             Nine Months Ended
                                                July 31                       July 31
                                         --------------------          --------------------
Condensed Statement of Income             1997          1996            1997          1996 
-----------------------------            ------        ------          ------        ------
<S>                                      <C>           <C>             <C>           <C>
Sales of manufactured products ......    $1,526        $1,325          $4,259        $4,110
Other income ........................         4             3              13            15
                                         ------        ------          ------        ------
Total sales and revenues ............     1,530         1,328           4,272         4,125
                                         ------        ------          ------        ------ 

Cost of products sold ...............     1,315         1,158           3,673         3,583
Postretirement benefits .............        50            52             158           163
Engineering and research expense ....        28            30              90            93
Marketing and administrative expense.        89            74             243           206
Other expenses ......................        42            41             125           126 
                                         ------        ------          ------        ------ 
Total costs and expenses ............     1,524         1,355           4,289         4,171
                                         ------        ------          ------        ------ 

Income (loss) before income taxes
  Manufacturing operations ..........         6           (27)            (17)          (46)
  Financial services operations .....        23            26              62            69
                                         ------        ------          ------        ------ 
    Income before income taxes ......        29            (1)             45            23
Income tax expense ..................         9             8              24            28
                                         ------        ------          ------        ------ 
Net income (loss) ...................    $   20        $   (9)         $   21        $   (5)
                                         ======        ======          ======        ======
</TABLE>

<TABLE>
<CAPTION>
                                                       July 31       October 31      July 31
Condensed Statement of Financial Condition              1997            1996          1996
------------------------------------------             -------         ------        ------
<S>                                                    <C>             <C>           <C>
Cash, cash equivalents
  and marketable securities ..............             $    19         $  174        $   44
Receivables, net .........................                 266            172           262
Inventories ..............................                 498            463           549
Property and equipment, net ..............                 652            666           643
Equity in financial services subsidiaries.                 310            306           303
Other assets .............................                 509            460           452 
                                                        ------         ------        ------
     Total assets ........................              $2,254         $2,241        $2,253
                                                        ======         ======        ====== 

Accounts payable, principally trade ......              $  826         $  772        $  675
Debt due Parent Company ..................                 944            884         1,023
Debt .....................................                  98            115           122
Postretirement benefits liability .........              1,213          1,344         1,316
Other liabilities ........................                 664            655           647
Shareowner's equity ......................              (1,491)        (1,529)       (1,530)
                                                        ------         ------        ------ 
     Total liabilities
       and shareowner's equity ...........              $2,254         $2,241        $2,253
                                                        ======         ======        ======
</TABLE>
<PAGE>
          <PAGE 10>

  Navistar International Transportation Corp. and Consolidated Subsidiaries
                 Notes to Financial Statements  (Unaudited)

Note J.  Supplemental Financial Information
<TABLE>
<CAPTION>      

Navistar International Transportation Corp. (with financial services operations
on an equity basis) in millions of dollars:

                                                        Nine Months Ended
                                                             July 31       
Condensed Statement of Cash Flow                         1997       1996
--------------------------------                        ------     ------
<S>                                                     <C>        <C>
Cash flow from operations
Net income (loss)...........................            $   21     $   (5)
Adjustments to reconcile net income to cash
   used in operations:
     Depreciation and amortization .........                72          68
     Equity in earnings of nonconsolidated
       companies, net of dividends received.                (4)        (23)
     Other, net ............................               (24)         (3)
Change in operating assets and liabilities .               (82)       (432)
                                                        ------      ------
Cash used in operations ....................               (17)       (395)
                                                        ------      ------

Cash flow from investment programs
Advance to Navistar Financial Corporation ..               (99)        (82)
Purchase of marketable securities ..........                 -        (153)
Sales or maturities of marketable securities                 5         238
Capital expenditures .......................               (89)        (72)
Other investment programs, net .............                 8           -
                                                        ------      ------ 

Cash used in investment programs ...........              (175)        (69)
                                                        ------      ------ 

Cash flow from financing activities ........                41          89 
                                                        ------      ------ 
Cash and cash equivalents
Decrease during the period .................              (151)       (375)
At beginning of the year ...................               170         418
                                                        ------      ------ 
Cash and cash equivalents
  at end of the period .....................            $   19      $   43
                                                        ======      ======
</TABLE>
<PAGE>
         <PAGE 11>

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

RESULTS OF OPERATIONS

     Certain statements under this caption constitute "forward-looking
statements" under the Reform Act, which involve risks and uncertainties. 
Navistar International Transportation Corp'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 Environment."

     Third Quarter Ended July 31, 1997
     ---------------------------------

     Transportation reported net income of $20 million for the third
quarter ended July 31, 1997, compared with a net loss of  $9 million for
the comparable quarter last year.

     Transportation's manufacturing operations reported income before
income taxes of $6 million compared with a pretax loss of $27 million in
the third quarter of 1996 reflecting continued strong demand for mid-range
diesel engines.  The financial services operations' pretax income for the
third quarter of 1997 was $23 million, compared with $26 million for the
same period in 1996.

Sales and Revenues.  Third quarter 1997 industry retail sales of Class 5
through 8 trucks totaled 93,100 units, which is an increase of two percent
over the 91,300 units sold during this period in 1996. Class 8 heavy truck
sales of 51,600 units during the third quarter of 1997 were two percent
higher than the 1996 level of 50,600 units.  Industry sales of Class 5, 6
and 7 medium trucks, including school buses, increased two percent to
41,400 units.  Industry sales of school buses, which accounted for 24
percent of the medium truck market, increased 11 percent.

     Sales and revenues for the third quarter of 1997 totaled $1,578
million, 14 percent higher than the $1,383 million reported for the
comparable quarter in 1996.  Sales of trucks, mid-range diesel engines and
service parts for the third quarter of 1997 totaled $1,526 million compared
with $1,325 million reported for the same period in 1996.

     Transportation maintained its position as sales leader in the combined
United States and Canadian Class 5 through 8 truck market with a 27.8
percent market share for the third quarter of 1997, a slight decrease from
the market share reported in 1996.  (Sources: American Automobile
Manufacturer's Association, the United States Motor Vehicle Manufacturer's
Association and R.L. Polk & Company.)

     Shipments of mid-range diesel engines by Transportation to other
original equipment manufacturers during the third quarter of 1997 totaled
41,900 units, a 16 percent increase from the same period of 1996.  Higher
shipments to Ford Motor Company to meet consumer demand for the light
trucks and vans which use this engine was the primary reason for the
increase.
<PAGE>
         <PAGE 12>

     Service parts sales of $197 million in the third quarter of 1997
increased more than six percent from the prior year's level.

     Finance and insurance revenue was $45 million compared with $53
million in the third quarter of 1996 primarily as a result of a decline in
wholesale financing activity.

Costs and expenses.  Manufacturing gross margin was 13.8 percent of sales
for the third quarter of 1997 compared with 12.6 percent for the same
period in 1996.

     Consolidated marketing and administrative expense increased to $96
million in 1997 from $83 million in the third quarter of 1996 reflecting
investment in the implementation of Transportation's strategy to reduce
costs and complexity in its manufacturing processes.

     Nine Months Ended July 31, 1997
     -------------------------------

     Pretax income for the first nine months of 1997 was $45 million
compared with $23 million reported for the same period of 1996. 
Transportation's manufacturing operations reported a loss before income
taxes of $17 million during this period, compared to a pretax loss of $46
million reported for the first nine months of 1996.  The financial services
operations' pretax income for the first nine months of 1997 was $62
million, a decline from the $69 million reported in 1996.  This change is a
result of lower income on sales of retail receivables and a lower volume of
wholesale financing.

     Manufacturing operations' sales and revenues during this period
totaled $4,272 million, an increase of four percent from 1996.  During the
first nine months of 1997, sales of trucks increased one percent while
sales of diesel engines to original equipment manufacturers increased 11
percent. Service parts sales were six percent higher than in the same
period of 1996. Finance and insurance revenue was $133 million during the
first three quarters of 1997 compared with $154 million in 1996.

     Industry retail sales of Class 5 through 8 trucks during the first
nine months of 1997 totaled 252,800 units, a slight decrease from the
258,900  units sold during this period in 1996.  The company remained the
sales leader in the combined United States and Canadian Class 5 through 8
truck market for the first three quarters of the year with a 27.1 percent
market share that is consistent with the same period a year ago.

     Manufacturing gross margin for the first nine months of 1997 increased
to 13.8 percent from 12.8 percent in the prior year.  The increase in gross
margin reflects increased sales volume, better product mix, and improved
operating performance, offset by increased accruals for profit sharing.

     Consolidated marketing and administrative expense was $266 million
during the first three quarters of 1997 compared with $231 million during
the first three quarters of 1996.  The factors which influenced this
expense during the third quarter of 1997 were also responsible for the
change during the first nine months of the year.
<PAGE>
         <PAGE 13>

Liquidity and Capital Resources

     Cash flow is generated from the manufacture and sale of trucks, mid-
range diesel engines and service parts as well as product financing and
insurance coverage provided to Transportation's dealers and retail
customers by the financial services operations.

     Historically, funds to finance Transportation's products are obtained
from a combination of commercial paper, short- and long-term bank
borrowings, medium- and long-term debt issues, sales of finance receivables
and equity capital.  NFC's current debt ratings have made bank borrowings
and sales of finance receivables the most economic sources of cash. 
Insurance operations are funded through internal operations.

     Total cash, cash equivalents and marketable securities of the company
amounted to $181 million at July 31, 1997, $348 million at October 31, 1996
and $224 million at July 31, 1996.

     Cash used in operations during the first nine months of 1997 totaled
$73 million primarily from a net change in operating assets and liabilities
of $133 million offset by net income of $21 million and $39 million of
other noncash items, principally depreciation.  The net change in operating
assets and liabilities includes a $48 million increase in payables offset
by a $43 million increase in receivables, a $40 million increase in
inventory and a $101 million decline in other liabilities.  The change in
other liabilities includes the company's contributions of $214 million to
its hourly and salaried pension plans during the first half of 1997.

     Investment programs provided $217 million in cash reflecting a net
decrease in marketable securities of $24 million and a net decrease in
retail notes and lease receivables of $304 million. In addition, $89
million was used to fund capital expenditures for construction of a truck
assembly facility in Mexico, to increase mid-range diesel engine capacity,
and for truck product improvements.

     Financing activities used cash to reduce notes and debt outstanding
under the bank revolving credit facility and asset-backed and other
commercial paper program by $494 million offset by a $176 million increase
in debt.

     Receivable sales were a significant source of funding in 1997 and
1996.  During the first nine months of 1997 and of 1996, NFC sold $987
million and $985 million, respectively, of retail notes through Navistar
Financial Retail Receivables Corporation (NFRRC).  NFRRC has filed
registration statements with the Securities and Exchange Commission which
provide for the issuance of up to $5,000 million of asset-backed
securities.  At July 31, 1997, the remaining shelf registration available
to NFRRC was $1,473 million.
<PAGE>
         <PAGE 14>

     During the third quarter of 1997, NFC entered into $100 million of
forward starting swap agreements which begin in October 1997 and expire in
July 1999.  NFC also entered into $100 million of forward interest rate
lock agreements on a U.S. Treasury security maturing in 1999.  NFC intends
to close these positions on the pricing date of the anticipated November
1997 sale of retail receivables.

     NFC also utilizes a $400 million revolving wholesale note trust that
provides for the continuous sale of eligible wholesale notes on a daily
basis.  The trust is comprised of two $100 million tranches of investor
certificates maturing serially from 1998 to 1999 and a $200 million tranche
maturing in 2004.  In July 1997, NFC filed a shelf registration to issue an
additional $400 million of investor certificates.  In August 1997, the
trust issued a $200 million tranche of investor certificates which matures
in August 2003.  The net proceeds of $199 million were used by NFC for
general working capital purposes.

     At July 31, 1997, available funding under NFC's amended and restated
credit facility and the asset-backed commercial paper facility was $755
million, of which $112 million was used to back short-term debt at July 31,
1997.  The remaining $643 million, when combined with unrestricted cash and
cash equivalents made $652 million available to fund the general business
purposes of NFC at July 31, 1997.

     During May 1997, NFC sold $100 million of Senior Subordinated Notes
due June 2002.  NFC used the net proceeds of $98 million to repurchase $6
million of its outstanding 1998 Notes and to reduce outstanding
indebtedness under the Bank Revolving Credit Facility.

     Transportation had outstanding capital commitments of $175 million at
July 31, 1997, which consist of truck and engine development, ongoing
facility maintenance programs and construction of a plant in Mexico. In
November 1996, Transportation announced plans to spend $167 million, over
the next two years, to construct this new truck assembly facility in
Mexico. During August 1997, the company approved a plan for $51 million of
capital expenditures to increase the manufacturing capacity of the
Indianapolis plant.

     Management continues to evaluate current and forecasted cash flow as a
basis for financing operating requirements and capital expenditures. 
Management also believes that collections on the outstanding receivables
portfolios as well as funds available from various funding sources will
permit the financial services operations to meet the financing requirements
of Transportation's dealers and customers.
<PAGE>
         <PAGE 15>

Business Environment

     Sales of Class 5 through 8 trucks are cyclical, with demand affected
by such economic factors as industrial production, construction, demand for
consumer durable goods, interest rates and the earnings and cash flow of
dealers and customers.  Although the general economy remains stable, demand
for new trucks in 1997 is anticipated to be slightly lower than in 1996. 
An improvement in the number of new truck orders has increased
Transportation's order backlog to 38,900 units at July 31, 1997 from 20,500
units at July 31, 1996.  Retail deliveries during the remainder of 1997
continue to be highly dependent on the rate at which new truck orders are
received. Transportation will evaluate order receipts and backlog
throughout the year and will balance production with demand as appropriate.

     Transportation currently projects 1997 United States and Canadian
Class 8 heavy truck demand to be 190,000 units, a three percent decrease
from 1996.  Class 5, 6 and 7 medium truck demand, excluding school buses,
is forecast at 114,000 units, a slight increase from 1996. Demand for
school buses is expected to decline six percent in 1997 to 30,500 units. 
Mid-range  diesel engine shipments by Transportation to original equipment
manufacturers in 1997 are expected to be 185,100 units, 13 percent higher
than in 1996.  Transportation's service parts sales are projected to grow
six  percent  to $809 million.

     During August 1997, the company's current master contract with the
United Auto Workers (UAW) was extended through October 1, 2002, and the
company announced plans to build its next generation truck (NGT), pending
approval by the Parent Company's Board of Directors in October.
Implementation of NGT will result in various plant rationalizations and
significant capital and development expenditures.

     The company also entered into a tentative ten year agreement,
effective with model year 2003, to continue to supply Ford Motor Company
with diesel engines for Ford's F-Series pickup trucks and Econoline vans.

New Accounting Pronouncements

     In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," (SFAS 130) and Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," (SFAS 131).  SFAS 130 establishes standards for reporting and
display of comprehensive income and its components.  SFAS 131 establishes
standards for reporting information about operating segments, and related
disclosures about products and services, geographic areas and major
customers.  The requirements of both statements are effective for fiscal
years beginning after December 15, 1997.  The impact of the adoption of
these statements on the company's financial position and results of
operations has not been fully determined.
<PAGE>
         <PAGE 16>

 Navistar International Transportation Corp. and Consolidated Subsidiaries


                        PART II - OTHER INFORMATION
                        ---------------------------


 Item 1.  Legal Proceedings

          Incorporated herein by reference from Item 3 - "Legal
          Proceedings" in Transportation's definitive Form 10-K
          dated January 22, 1997, Commission File No. 1-5236. 


Item 6.   Exhibits and Reports on Form 8-K

             (a)  Exhibits:                               10-Q Page
                                                          ---------

                    3. Articles of Incorporation
                       and By-Laws                            E-1
                   10. Material Contracts                     E-2

             (b)  Reports on Form 8-K: 

                  No reports on Form 8-K were filed for
                  the nine months ended July 31, 1997.
<PAGE>
         <PAGE 17>


                                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 INTERNATIONAL TRANSPORTATION CORP.
-------------------------------------------
               (Registrant)






/s/     J. Steven Keate
-------------------------------------
        J. Steven Keate
       Vice President and Controller
       (Principal Accounting Officer)


September 12, 1997