Ford's Premier Automotive Group, which includes Jaguar and Land Rover, plunged into the red in the first quarter of the year.
The luxury car operation, which also takes in Aston Martin and Volvo, made a loss of $55 million (£29 million) between January and March compared with a pretax profit of $33 million (£17 million) in the same period last year.
The deficit, which was incurred on sales 12 per cent up at $7.6 billion (£4 billion), was mainly due to unfavourable exchange rates, but had been offset partially by lower costs. The strong pound - currently worth about $1.92 - is bad news for Jaguar and Land Rover, both of which rely heavily on the US for their earnings.
Both manufacturers are under the Ford microscope, with Jaguar under pressure to stem heavy-financial losses and Land Rover under orders to improve the build quality of its off-roaders.
Mark Foster, a West Midlands-based spokesman for PAG, said despite the first quarter plunge into the red, the group still expected to turn last year's losses into a profit at the lower end of the $300- 600 million ( £ 156 --313 million) in 2005 as a whole.
"It will probably be at the lower end of the range because of the impact of higher rawmaterial costs and the very tough market conditions that we are experiencing. The weak dollar is having a really big impact on Jaguar and Land Rover."
Ford does not give financial breakdowns for individual marques, but a black cloud has been hanging over Jaguar since chairman and chief executive Joe Greenwell admitted that the Coventrybased manufacturer was losing "hundreds of millions of pounds" and would not break even until 2007 at the earliest.
But subsequent comments by Mr Greenwell's boss, Mark Fields, Ford's senior European executive, to the effect that a financial turnaround at Jaguar was not vital to PAG's target of contributing a third of Ford's group profits by next year was seen as taking some of the pressure off the Big Cat.
While Jaguar's sales are suffering in the general market downturn experienced so far this year, the company is stressing its emphasis on strengthening margins rather than chasing volumes.
At the same time, Land Rover is in the enviable position of having two potentially world-beaters in its line up in the shape of the new Discovery and the Range Rover Sport, production volumes for which are fully booked up to the end of the year.
Mr Field and Mr Greenwell recently visited Land Rover to check on the progres of the so-called Road Map aimed at improving quality and productivity.
They said they had seen signs of progress, but emphasised that the Lode Lane plant still had some way to go toward achieving world-class competitiveness.
Ford's first quarter group profits fell by 38 per cent to $1.21 billion (£630 million) on sales up by nearly one per cent at $45.1 billion (£23.5 billion).
The figure was a lot better than had been expected, however, and Wall Street responded by marking Ford's stock up by about two per cent in early trading.
But the world's third largest car group again showed its reliance on its finance arm, which contributed earnings of $710 million (£370 million) compared with the core automotive operation ' s $473 million (£246 million).
Ford is fighting the same problems - including rising health-care and raw material costs - that caused its Detroit rival General Motors to notch up a first quarter loss of $1.10 billion (£579 million).
Ford Europe reported a pretax profit of $59 million (£30.7 million), up from $5 million dollars (£2.6 million) last year. The improvement mainly reflected higher volumes and cost cuts, Ford said.
PAG employs about 16,500 staff in the UK at sites including Solihull, Castle Bromwich, Coventry, Gaydon and Halewood.
Ford employs around 14,200 people in Britain at sites including its UK head office at Brentwood, Dagenham, Bridgend, Southampton, Halewood, Dunton, Daventry and Leamington.