Android Auto is in Android L.
Your phone needs to have Android L on it, which will then produce the screen for your car.
I too, am looking at using the Nexus 7 (or 9) as the dash for my car.
It does look possible as it is mentioned in the Android Auto Developer website, as possible.
We need to wait for the Android Auto SDK in order to do this.
When Android L is released (which should be this month), I imagine that is when the SDK will be released, and many people will be posting how to use your Nexus 7 as the Android Auto screen for your car!