A private dealer is interested in buying the Government's ministerial BMWs when they come up for sale, but rejects the suggestion that a $50,000 donation will sweeten its chances.

It was revealed this week that Team McMillan, a BMW dealer in Auckland, donated $50,000 to the National Party last July, after holding a fundraiser function which Prime Minister John Key attended.

The Government is upgrading its ministerial fleet with 34 new limos from BMW New Zealand, a deal that was signed off two days before the donation was given.

The Labour Party said there was at least a potential conflict of interest, a claim Team McMillan and Mr Key reject.

The verbal blows escalated this week, peaking when Mr Key said Labour was engaged in a "baseless smear on my integrity" after MP Trevor Mallard used parliamentary privilege to imply Mr Key was corrupt.

"They sat down with Ministerial Services and agreed to a renewal of [the BMW] contract, and two days later $50,000 went to the National Party," Mr Mallard said.

"If that was overseas, we would say it was corruption. If that happened in Australia ... in Thailand, in India, I would have called that corruption."

Yesterday, Mr Key said Labour's attack was "sad" and challenged Mr Mallard to repeat his words without "hiding behind parliamentary privilege".

"They're hiding behind lies ... You're a week out from the Budget and all the Labour Party can do is throw a bit of dirt. [Labour leader] Phil Goff can't control his own member, and I think it's quite sad."

Mr Mallard toned down his comments last night.

"I'm not suggesting the Prime Minister's office is corrupt. But there is a perception of conflict of interest.

"I'm waiting for the evidence that Team McMillan won't be onselling the cars."

Team McMillan managing director Bob McMillan said he would be interested in the BMWs.

"Any prestige car dealer would. If they put a tender notice in the paper listing these cars ... I dare say there'd be an awful lot of bees around the honey pot and we would be one of them."

He said he had not expressed an interest to the Government, including Mr Key or the Internal Affairs Department.

Mr McMillan rejected the suggestion that the donation could be seen as greasing the wheels for a future deal.

"Absolutely not. Our donation was to the National Party. I have a relationship with the president, I know John Key personally, and I have tremendous respect for the work they have done."

Regardless of the Crown's BMW contract, "we would have held that function and made a donation. It is very likely we will make a similar donation later this year," he said.

A Department of Internal Affairs spokesman said no decisions had been made on how the BMWs will be sold, but said the best price would be sought.