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In this paper, to achieve a vehicle user's privacy preservation while improving the key update efficiency of location-based services (LBSs) in vehicular ad hoc networks (VANETs), we propose a dynamic privacy-preserving key management scheme called DIKE. Specifically, in the proposed DIKE scheme, we first introduce a privacy-preserving authentication technique that not only provides the vehicle user's anonymous authentication but enables double-registration detection as well. We then present efficient LBS session key update procedures: 1) We divide the session of an LBS into several time slots so that each time slot holds a different session key; when no vehicle user departs from the service session, each joined user can use a one-way hash function to autonomously update the new session key for achieving forward secrecy. 2) We also integrate a novel dynamic threshold technique in traditional vehicle-to-vehicle (V-2-V) and vehicle-to-infrastructure (V-2-I) communications to achieve the session key's backward secrecy, i.e., when a vehicle user departs from the service session, more than a threshold number of joined users can cooperatively update the new session key. Performance evaluations via extensive simulations demonstrate the efficiency and effectiveness of the proposed DIKE scheme in terms of low key update delay and fast key update ratio.