China a bright spot for German luxury carmakers

* Mercedes-Benz brand sales in China up 41 pct in Jan-Sept

* Audi brand sales rise 20 pct; BMW brand up 32 pct

* Luxury segment closer than mass mkt to underlying demand

The booming Chinese auto market continues to be one of the few bright spots for German luxury carmakers, which have drawn few benefits from a flurry of subsidy programmes like the U.S. cash for clunkers scheme.

Daimler's (DAIGn.DE) Mercedes-Benz, Volkswagen's (VOWG.DE) Audi and BMW's (BMWG.DE) flagship BMW brand all posted year-on-year volume gains of above 35 percent in the country in September, they said on Tuesday.

Globally, BMW and Daimler have been suffering double-digit declines this year while Audi has cut its sales contraction to slightly below 10 percent.

Thanks to the new E-Class saloon that nearly doubled sales to 1,700 units, Mercedes-Benz's volumes in China grew by 56 percent to about 6,800 vehicles last month, albeit from a lower base than its two German rivals.

It shifted 1,600 cars from its top-of-the-line S-Class model that carries fat margins, a gain of 12 percent. Sales of its SUV models jumped 73 percent to 1,200 vehicles.

This helped boost the brand's overall volumes in the first nine months by 41 percent to 45,400 vehicles.

Mercedes-Benz is the fastest growing luxury brand in China, both in September and in the three quarters since January, a spokeswoman for Daimler said.

Daimler also sold some 1,200 Smart ForTwos since the brand was launched in April.

BMW boosted sales of its core brand by 35 percent to 7,628 vehicles in the month, and by 32 percent to 59,460 for the first nine months.

Audi gained 37 percent last month to over 15,000 vehicles - the first time it breached that level. That helped it easily crack the 100,000-mark through September, increasing volumes by a fifth so far this year.

Volkswagen's luxury brand is far more heavily dependent on China for its performance than Mercedes or BMW thanks to VW's strong presence in the market over the past two decades and Audi's weak U.S. sales compared to its two biggest competitors.

A few days ago, Audi and its Chinese joint venture partner began production of the Q5 SUV in Changchun, where it already builds the long-wheelbase versions of the A4 and A6 saloons.

(Reporting by Christiaan Hetzner; editing by John Stonestreet)