Korean suppliers set for gains abroad as BMW signs on

Hyundai Motor's steady climb in the global auto industry has nurtured a strong base of local suppliers, and South Korean parts makers could be looking at more business overseas after adding premium car brand BMW to their list of clients.

BMW, the world's top maker of premium cars, said on Friday it now has contracts with 12 South Korean suppliers, as it announced a fresh $170 million brake deal with Mando Corp.

News that the marquee brand much admired for its engineering expertise was sourcing so heavily in Korea pushed up shares in parts makers such as SL Corp and Pyeong Hwa Automotive Co, which have a relatively high presence overseas compared with their local peers.

"This is the first time that a luxury car brand has made it public that it will use Korean parts in its cars," said Ko Tae-bong, an analyst at IBK Investment & Securities.

"We expect this to have a ripple effect on other automakers such as Volkswagen," he added.

Among other suppliers on BMW's list are Hyundai Mobis, Hankook Tire, Kumho Tire and SB LiMotive, a battery joint venture between Samsung SDI and Germany's Bosch, BMW's purchasing chief, Herbert Diess, told reporters in Seoul on Friday.

"The success of Korean car makers has spurred automakers to turn their attention to their suppliers," said Kang Sang-min, an analyst at Hanhwa Securities.

"The IPOs of major parts makers such as Mando (in May) and Hyundai Wia (later) this year are also stirring investor interest."

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