UPDATE 2-VW CEO says Suzuki would be interesting -magazine

* VW CEO says Suzuki interesting due to small car expertise

* German magazine says VW interested in 10 pct stake, JV

* Three new Porsche models envisaged to help double sales

* VW shares down 3.4 pct (Adds comments on new Porsche models)

FRANKFURT, Aug 20 (Reuters) - Volkswagen (VOWG.DE) could be interested in a tie-up with Japanese carmaker Suzuki Motor Corp (7269.T), Chief Executive Martin Winterkorn told a German magazine.

"Suzuki would be an interesting partner because of its competency in small cars," he said in an interview with Manager Magazin released ahead of publication on Friday.

Volkswagen, Europe's biggest carmaker, was not immediately available for comment, while Suzuki had no comment.

A person familiar with the matter said there had already been talks between VW and Suzuki.

The magazine said, without citing sources, that Volkswagen was interested in taking a 10 percent stake in Suzuki or forming a joint venture. It said France's Renault (RENA.PA) was also in talks with Suzuki. Renault was not immediately available.

Suzuki CEO Osamu Suzuki had last told media in late June that he had had no contact with VW, shooting down a Manager Magazin report at the time that Europe's largest carmaker was exploring a deal with its Japanese rival to boost its presence in ultra small cars. [ID:nT342548]

Shares of Volkswagen were down 3.4 percent at 141 euros by 0934 GMT, while Renault was up 3.3 percent at 32.50 euros. The DJ Stoxx European car sector index .SXAP was up 1.5 percent.

In the magazine interview, Winterkorn defended terms of VW's deal to buy an initial minority stake in Porsche's (PSHG_p.DE) sports car business for up to 3.3 billion euros ($4.65 billion) as a step toward a full merger of the carmakers. [ID:nLE574300]

"We are not giving away any money here," he said, adding several investment banks and auditors had confirmed it was paying a fair price in the deal.

The transaction is set to make Porsche the 10th brand in Volkswagen's camp, which ranges from small cars to heavy trucks.

Winterkorn said he could imagine Porsche's annual vehicle sales doubling to around 150,000 units "in the foreseeable future, say 2012 or 2013" as it adds more models.

These could include a new model smaller than the Boxster, its smallest car so far; a "little brother" to the Cayenne sport utility vehicle and an additional version of the new Panamera four-door sedan, he said. (Additional reporting Benjamin Mallet in Paris, Arno Schuetze in Hanover and Chang-Ran Kim in Tokyo) (Reporting by Maria Sheahan)