A novel method of monitoring the quality i.e. the percentage of purity of diesel fuel in real-time environment in smart vehicles is presented here. The method incorporates temperature compensated density measurement using a dual load cell and temperature sensor. The mass of the small fixed volume of diesel sample and temperature of diesel are measured by the pre-calibrated load cell based amplifier set up and a smart miniature temperature sensor respectively. The amplified voltage of the load cell provides the measure of the density of the fuel. Further, the measured value of fuel density is temperature compensated and compared with standard reference values to indicate percentage of purity of the diesel sample. The method is automated with an intelligent virtual instrument that provides all the means of testing the fuel sample and displaying results with high level of accuracy ~ 99.8 %. The model offers a way of providing vital real time information to user and has great future prospects. Also, the data collected can be analyzed for developing complex mathematical models to suggest optimized driving parameters for vehicles.