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Shanghai Automotive gives up stake in Chery - sources

SHANGHAI, Nov 20 (Reuters) - Shanghai Automotive Industry Corp, China's number-two auto maker, has unloaded its 20 percent stake in Chery, which is in a piracy dispute with General Motors Corp , industry sources said.

Anhui-based SAIC-Chery Automobile Co gave the 20 percent stake to Shanghai Automotive, an equal partner in China ventures with General Motors Volkswagen AG , for free in 2001 in return for the right to use its brand and technology.

"Shanghai Automotive has given up, not sold, the stake in Chery," one industry source familiar with the situation told Reuters on Thursday, declining to elaborate.

General Motors began investigating media allegations earlier this year that the new "QQ" minicar sold in China by Chery bears a strong resemblance to the Chevrolet Spark, which will go on sale in China later this year.

General Motors officials were not immediately available for comment.

"We have no further information on the change of share structure," Shanghai Automotive spokesman Xue Hao told Reuters.

A marketing executive at Chery expressed surprise at the news.

"I haven't heard about that. We are still using the Shanghai Automotive brand," the official told Reuters by telephone from company headquarters in Anhui province.

Shanghai Automotive executives said last month they expected the Chery problem would be solved "soon", without going into details.

Chery, which has denied copying any GM product, has had its share of controversy.

Last year, Volkswagen said parts produced by the German company had been used illegally in one of Chery's cars.

The Chinese firm said it used technology bought legally from Volkswagen, which finally agreed with Chery suppliers that they would stop using original VW components.