A private BMW dealer has rubbished the suggestion that a $50,000 donation from his company to the National Party had anything to do with the Government's new fleet of BMW cars.

The Labour Party yesterday continued its attack on what it calls the Government's "nice to haves", such as the Prime Minister's use of bodyguards and the 34 new BMWs to upgrade the ministerial fleet.

John Key countered by accusing Labour of a "baseless smear" and odd priorities on a day when he made a major pre-Budget speech.

Labour's internal affairs spokesman, Chris Hipkins, revealed that the BMW dealer's donation came two days after a July 2010 meeting between Mr Key's chief-of-staff, Wayne Eagleson, and the Department of Internal Affairs, which approved the BMW upgrade.

It was a month after a function that Mr Key attended at Auckland BMW dealership Team McMillan.

Managing director Bob McMillan said yesterday his company had nothing to do with the Government BMW contract.

"It is handled by BMW NZ. We are a privately owned family operation. I haven't supplied a single vehicle to any government in my life."

He said the function was not for fundraising, but he was a "strong supporter" of Mr Key and some customers decided to contribute to a Team McMillan donation.

National's 2010 donation return shows a $50,000 donation in the name of Team McMillan, which contributed $40,400 of the total.

Labour said the donation's timing created a perception of a conflict of interest.