Brussels has upped the ante in its clash with Volkswagen over the German carmaker’s refusal to compensate VW car owners in Europe caught up in the “dieselgate” scandal, with officials warning there could be negative consequences for the car industry.

The European Commission is objecting to how VW has offered US owners of diesel cars that were equipped with software to cheat emissions tests up to $10,000 each in compensation, but nothing to their European counterparts.

EU officials said VW’s blunt refusal to make a gesture to car owners in Europe could do reputational damage to the wider industry, with a knock-on effect on the reception that the sector will get when it tries to lobby the regional bloc on other issues. One official even made a comparison with the cold shoulder given to banks when the EU set about regulating the sector in the wake of the 2008 financial crisis.