* Europe deliveries drop 18 pct yr/yr
* Renault product launches at heart of decline (Adds quotes, details)
STOCKHOLM, Sept 18 World number two truck maker Volvo said on Wednesday deliveries of its trucks dropped four percent year-on-year in August as shipments fell in both Europe and North America, held back by an extensive renewal of its product line.
With a tentative European recovery gaining pace, truck makers have begun raising production to meet stronger demand though Volvo has said costs of ramping up production of a wide range of new vehicles would weigh in the months ahead.
"In this situation of extensive product launches, you get volatility between the months of delivery. July was a little better than it should have been and in August was worse," said Hampus Engellau, an analyst at Handelsbanken Capital Markets, adding that he had expected volumes would be up 8 percent.
Volvo, which sells trucks under the Renault, Mack and UD Trucks brands as well as its own name, said shipments in its top market, Europe, slipped 18 percent while they dropped 3 percent in North America.
Shipments increased 12 percent in South America, where government incentives have underpinned booming demand in Brazil over the past year, while they were flat in Asia.
An upturn in demand in Europe has led to order books growing in recent months, albeit from low levels, while a U.S. recovery is on firmer ground after a rough patch around the turn of the year as public spending was cut.
An extensive product renewal is underway at Volvo with the company rolling out five new truck models.
Renault Trucks launched a completely new truck programme in June. Volvo said on Wednesday production of certain models of the new ranges at Renault had started with the first deliveries expected in September.
Renault reported a 30 percent drop in deliveries in August compared with the same period a year ago. (Reporting by Mia Shanley and Johannes Hellstrom; editing by Niklas Pollard)