UPDATE 1-Audi's Q1 sales record steps up challenge to BMW
* Audi has all-time monthly sales record in March
* Audi leads Mercedes by 38,574 cars in Q1 sales
* BMW expected to publish Q1 sales this week (Adds detail on sales data, analyst comment)
BERLIN, April 7 (Reuters) - Audi is stepping up its challenge to unseat German rival BMW as global luxury-car sales champion, with recovering European demand and Chinese growth pushing its first-quarter deliveries to a record.
Volkswagen's flagship luxury division, already leading BMW by a whisker after two months, said on Monday that deliveries in March rose 15.4 percent to an all-time monthly record of 170,450 cars.
Fueled by demand for the expanded A3 line, Audi's European sales, accounting for almost half of its global deliveries, were up 7.2 percent in March, led by double-digit growth in Germany and the UK.
"As the top European premium brand, Audi surely benefits disproportionately from the region's unfolding recovery," said Marc-Rene Tonn, analyst with Hamburg-based M.M. Warburg.
First-quarter deliveries were up 11.7 percent to a record 412,850 cars, Audi said, powered also by a 21 percent gain in China where the carmaker started assembly of the A3 sportback model at a factory in Foshan in late 2013.
That compares with 374,276 cars for rival Mercedes-Benz , which dropped behind Audi into third place in the global luxury-car sales rankings in 2011.
Munich-based BMW, which has been the top-selling luxury manufacturer for nine straight years, is expected to publish March deliveries later this week.
Although its product cycle has peaked, unbroken demand from Germany and abroad may cause Audi to keep raising output during the second quarter after adding 53 additional production shifts in its home country between January and the end of April, a spokeswoman said on Sunday. (Reporting by Andreas Cremer, Editing by Edward Taylor and Mark Potter)
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