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In this paper, we study the impact of GPS positioning errors on the operation of Vehicular Adhoc Networks. To the best of our knowledge, this important issue has not been investigated before. First, we formulate a straight-road model. Then, to reduce the computational complexity of finding the expected degradation, we propose an approximate formula. The results of the simulations show that GPS errors do indeed degrade the hop-distance in VANETs. Moreover, the proposed approximation method yields good accuracy under sparse density conditions. Our study provides a good starting point for further research into this issue.