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The characteristics of vehicular communication environments and their networking and application requirements have led to the development of unique networking protocols. They enable vehicle-to-vehicle and vehicle-to-infrastructure communication based on the IEEE 802.11 technology, ad hoc principles, and wireless multihop techniques using geographical positions. These protocols, which are commonly referred to as Geocast, greatly support the vehicular communication and applications but necessitate a tailored security solution that provides the required security level with reasonable processing and protocol overhead, as well as reasonably priced onboard and road-side unit equipment. In this paper, we present the design of a security solution for Geocast, which is based on cryptographic protection, plausibility checks using secure neighbor discovery and mobility-related checks, trustworthy neighborhood assessment, and rate limitation. We analyze the achieved security level of the proposed scheme and assess its overhead and performance. Furthermore, we develop a software-based prototype implementation of a secure vehicular communication system. We find that the proposed security measures could result in a network performance bottleneck in realistic vehicular scenarios. Finally, we analyze the tradeoff between security overhead and protocol performance and determine the minimal processing overhead needed for acceptable performance.