VW CEO says next year will be much tougher - paper

FRANKFURT Nov 21 (Reuters) - Volkswagen will face a much tougher business environment next year as demand from countries at the centre of the European debt crisis wanes, the carmaker's chief executive said.

"There's no question that 2012 will be considerably harder, mostly in Europe and there particularly in the highly indebted countries such as Italy and Spain," CEO Martin Winterkorn told German daily Handelsblatt in an interview on Monday.

The region's market looked set to shrink next year, he added.

The head of Europe's largest carmaker also reaffirmed his refusal to sell VW's stake in Suzuki Motor, the estranged cooperation partner that has called on VW to dissolve the alliance.

Winterkorn indicated he was willing to stick it out until the Japanese company's management is replaced.

"If Suzuki's current management doesn't want to work with us, then maybe the next generation," the CEO was quoted as saying.

"No meeting is planned. But if we met we could talk about everything except for one thing. We will not sell our stake in Suzuki," he said.

Suzuki and VW on Friday seemed headed for arbitration, after VW refused again to sell its 20 percent stake back to the Japanese carmaker to end a floundering two-year alliance. (Reporting by Ludwig Burger; Editing by Erica Billingham)