Theory and applications of model-based fault diagnosis have progressed significantly in the last four decades. In addition, there has been increased use of model-based design and testing in the automotive industry to reduce design errors, perform rapid prototyping, and hardware-in-the-loop simulation (HILS). This paper presents a new model-based diagnostic development process for automotive engine control systems. This process seamlessly employs a graph-based dependency model and mathematical models for online/offline diagnosis. The hybrid method improves the diagnostic system's accuracy and consistency, utilizes existing validated knowledge on empirical models, enables remote diagnosis, and responds to the challenges of increased system complexity. The development platform consists of an engine electronic control unit (ECU) rapid prototyping system and HILS equipment - the air intake subsystem (AIS). The diagnostic strategy is tested and validated using the HILS platform.