Is a new limo on the way for Prime Minister John Key?

The fleet of luxury limousines used to ferry around VIPs and ministers of the Crown is set to be replaced after just three years on the road.

The high-end BMWs were a bone of contention when they were bought for an undisclosed sum after the previous fleet was retired, also with just three years on the clock, under a deal struck with BMW in 2008.

The Government insisted that the purchase was a good deal, and that it received a hefty discount off the usual $200,000 price of each car.

But Prime Minister John Key admitted at the time that it was not a good look when the public service was being asked to tighten its belt – though he did not rule out BMW being approached again when the contract expired in 2014.

Economic Development Minister Steven Joyce confirmed on Tuesday that the Ministry of Business, Innovation and Employment was negotiating with a potential supplier for the VIP cars as part of a broader process to upgrade the public service fleet.

His office would not confirm whether BMW was the supplier in question, and said that information was commercially sensitive.

Joyce said contracts had already been awarded to Ford, Holden, Hyundai, Mazda, Mitsubishi, Suzuki and Toyota to supply vehicles for other government agencies. Three of the vehicles in the new contract were hybrids: the Toyota Prius and the Toyota Camry, plus the plug-in Mitsubishi Outlander PHeV.

Nine vehicles had been submitted for evaluation for the VIP fleet and negotiations were continuing with a preferred supplier for this contract.

"The Department of Internal Affairs will announce the decision on the supplier for the VIP fleet in due course."

Joyce said MBIE was working with the Ministry of Transport to identify options to promote increased electric vehicle use by government agencies.

The Government spent about $128 million on 4550 vehicles for the public service last year.