Ford Europe turned in a pre-tax operating loss of $196m (£125m) in the third quarter in sharp contrast to the profit of $131 million generated a year ago.
The decline reflected lower industry volumes and market share and higher costs.
Third quarter revenue was $6.2bn, down from $7.3bn a year ago.
According to Acea figures, Ford’s European market share in the first nine months of the year has fallen to 8.3 per cent compared to 8.9 per cent in 2009.
Sales have fallen 10 per cent for the period to 876,475 cars.
The European sales figures were included in Ford’s overall strong global performance, with pre tax operating profits of $2.1bn, a $1.1bn improvement over the third quarter of 2009.
Ford has now posted pre-tax operating profits for five consecutive quarters.
The carmaker continues to reduce its debt and strengthen its balance sheet.
“This was another strong quarter and we continue to gain momentum with our One Ford plan,” said Ford president and CEO Alan Mulally.
“Delivering world class products and aggressively restructuring our business has enabled us to profitably grow even at low industry volumes in key regions.
“The key drivers for improvement in 2011 will be our growing product strength, a gradually strengthening economy and an unrelenting focus on improving the competitiveness of all our operations,” he added.