Yes there are many ways to approach this.
From the most sofisticated one , connecting with todays Cars on-board CPU via OBD protocoll. You can aobtain much more than just RPM and Speed .
Have a look here as a start point , and I am quite shure there are circuits for this on the net , I have seen them.
http://www.scantool.net/To the simplest possible way , this one I have done succesfully with other Rotating machines . In this approach you only need a basic PIC and a Sensor that can trigger a pulse every time the rotating part completes a turn.
I have used 2 type of Optical Sensors , i.e.
a) QRD1114 a IR reflective type sensor , for it you need a white to black transition to detect on rotating part . ( datasheet attached )
b) CNZ1120 a IR gate type sensor ( switch) , for it you need a protruding piece of rotating part to pass trough its gate. ( datasheet attached )
Both a and b are very simple to code , I have used Pulse lenght meassuring routines and also Interrupts triggered by changing ports state.
Circuits for this need only two resistors .
One bonus of QRD1114 , if you experiment with it , you will find out that it can be used as a proximity sensor ( distance sensor ) as it outputs an analog voltage changing proportionally to the distance at the reflecting surface ( good for up to 70 - 80 mm ).
Both sensors under 1 US$ or so.
Hope this helps
Greetings
