MONTREAL/TOKYO Aug 31 (Reuters) - Kawasaki Heavy Industries of Japan said on Thursday it was vying to win a $3.2 billion subway contract with the largest U.S. transit agency, after Bombardier Inc of Canada acknowledged this week that it was out of the running.

Bombardier Transportation, the company's German-based rail unit, and China's CRRC Corp were jointly bidding for the contract from New York's Metropolitan Transportation Authority (MTA) for at least 1,000 subway cars, a source familiar with the matter said.

The two are no longer in the running because of Bombardier's delays in completing a separate MTA subway car contract, said the source who spoke on condition of anonymity about the confidential bidding process.

Bombardier said this week it was "disappointed" about being excluded from the procurement, but would not give a reason.

Kawasaki is working with France's Alstom SA as system supplier for the cars, the source said.

Maika Yamashita, a spokeswoman for Kawasaki Heavy in Tokyo, said the company was trying to win the bid. "We have not heard that an order has been decided," she added.

Both Bombardier and Kawasaki are longstanding suppliers for the MTA, the largest U.S. transit agency by ridership, which serves one in three mass transit riders and two-thirds of rail riders in the country.

CRRC in China could not immediately be reached for comment.

Representatives for the MTA spokesman and Alstom declined to comment. (Reporting By Allison Lampert in Montreal and Naomi Tajitsu in Tokyo; Additional reporting by Brenda Goh in Shanghai; Editing by Richard Chang)