The former chief of Ford Europe Martin Leach is suing the company over his departure in August, an industry source told the Reuters news agency on Wednesday.

The news agency said that the Financial Times reported that Leach is suing the company for up to €60 million, alleging the company wrongly announced he had resigned and then prevented him from working for a competitor.

Reuters said that the paper reported that court documents filed in Michigan showed Ford had been trying to push Leach out of his job as president and chief operating officer of the European division.

The source told Reuters they understood there was a suit but could give no details while Ford Europe, still struggling to return to profit, reportedly declined to comment further because the issue is legally pending.

Reuters noted that Ford Europe announced Leach had left the company in August, a few weeks after the company posted a shock $US525 million loss for the second quarter.

Ford of Europe's efforts in recent years to cut costs, shut plants and launch new models had been held up as the model for the company's turnaround efforts in North America but weak demand and pricing in Europe combined with negative effects from currency fluctuations undermined its recovery, the report added.

Lewis Booth has now replaced Leach as head of Ford's European operations as it battles to reverse its losses, Reuters said, adding that Fiat Auto had sought to hire Leach but was stopped from doing so due to a non-compete clause, understood to be valid for two years.

Instead, Fiat named former Volkswagen manager Herbert Demel as chief of its car unit, Reuters added.