Volvo, the world's second biggest manufacturer of heavy trucks, posted on Wednesday its steepest drop in truck shipments in more than three years, hurt by sluggish demand in Europe and North America.

Volvo, which sells trucks under the Renault, Mack, UD Trucks and Eicher brands as well as its own name, said deliveries were down 23 percent year-on-year in January.

That was the biggest drop since December 2009 when shipments fell 29 percent, a spokeswoman said.

Weak demand in Volvo's main markets has left its factories running at half speed and pushed the company into a heavier than expected earnings fall in the fourth quarter.

Volvo, which says it will dethrone Germany's Daimler as the world's biggest manufacturer of heavy trucks on the back of a joint venture in China that still needs approval from Chinese authorities, has warned of a tough first quarter.

Shipments in its biggest market, Europe, were down 30 percent while they were 38 percent lower in North America.

Heavy-duty truck makers have run into tougher times as the deep economic downturn in Europe and sluggish activity in North America have weighed heavily on the highly cyclical demand for commercial vehicles.

Volvo said its UD truck deliveries in Asia looked particularly weak following strong demand last year due to reconstruction following a tsunami in Japan.

Overall shipments were down 23 percent in Asia though up 36 percent in South America.

Volvo has been cutting shifts and inventories because of weaker demand but has stood by a forecast for flat 2013 markets in Europe and North America.