SHANGHAI (Reuters) - Volkswagen will exit its controversial plant in China's Xinjiang region after it and its Chinese partner agreed to sell the asset to a Shanghai government-owned buyer, two people familiar with the matter said on Wednesday. The German automaker and SAIC will sell the plant to Shanghai Motor Vehicle Inspection Certification (SMVIC), a subsidiary of state-owned Shanghai Lingang Development Group, the sources said.

The transaction value of the deal was not immediately clear.

Volkswagen’s presence in Xinjiang has become a headache for the company in recent years after rights groups documented abuses including mass forced labour in detention camps in the region. Beijing denies any such abuses.

Under the deal, SMVIC will also take over SAIC/VW's test tracks in Turpan Xinjiang and Anting in Shanghai, they added. Following the deals, Volkswagen will no longer have any presence in Xinjiang, they said. At the same time, Volkswagen will extend its partnership with SAIC by a decade to 2040 and the joint venture aims to release 18 new models by 2030, the people said. The people declined to be identified as details of the deal were not yet public.

In response to a Reuters request for comment, SAIC said its joint venture with VW will make an announcement but it did not say when it would be made.

VW did not immediately reply to a request for comment.

VW said earlier this year it is talking to SAIC about the future direction of its business activities in Xinjinag and considering various scenarios.

(Reporting by Zhang Yan, Brenda Goh; Editing by Miyoung Kim and Kim Coghill)