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VANET is an ad hoc network composed of highly mobile vehicle nodes. Many routing protocols utilize traffic information as a critical metric for determining optimal message forwarding path. The existing traffic information systems are not suitable for routing decision either because of the huge development and maintenance cost or due to the insufficient information provision. In this paper, a new distributed approach of traffic estimation is presented, where the position data that our location service provides is mined to build traffic information system. Based on the location information of vehicles, the traffic density of whole network can be evaluated in each small region separately. The node distributions that held by location servers in street segments are exploited and aggregated together to calculate the overall traffic information. The analyses and simulations about the update cost and query delay for both location service and traffic information system are given.