As far as service charges / labour is concerned, then YES, its rates can vary depending on quality of service, however, it does not mean that they can charge what ever they want!
If I own an an old model, luxury and comfortable vehicle, then it does not mean that I also have to pay huge amounts for service.
IMO, if local car assemblers are unable to do localization of important parts, then there seems no fun in assembling cars here. Then why not directly import from abroad?
Making sub-standard (when compared to International counterparts) local oil filters, plastic parts, dashboard plastic, etc., with strange panel gaps, fit and finish issues, poor QA/QC is no localization IMO. Its extortion of money from pockets of general public, in the name of "premium" brands.