Traffic querying, road sensing and mobile content delivery are emerging application domains for vehicular networks whose performance depends on the throughput these networks can sustain. Rate adaptation is one of the key mechanisms at the link layer that determine this performance. Rate adaptation in vehicular networks faces the following key challenges: (1) due to the rapid variations of the link quality caused by fading and mobility at vehicular speeds, the transmission rate must adapt fast in order to be effective, (2) during infrequent and bursty transmission, the rate adaptation scheme must be able to estimate the link quality with few or no packets transmitted in the estimation window, (3) the rate adaptation scheme must distinguish losses due to environment from those due to hiddenstation induced collision. Our extensive outdoor experiments show that the existing rate adaptation schemes for 802.11 wireless networks underutilize the link capacity in vehicular environments. In this paper, we design, implement and evaluate CARS, a novel Context-Aware Rate Selection algorithm that makes use of context information (e.g. vehicle speed and distance from neighbor) to systematically address the above challenges, while maximizing the link throughput. Our experimental evaluation in real outdoor vehicular environments with different mobility scenarios shows that CARS adapts to changing link conditions at high vehicular speeds faster than existing rate-adaptation algorithms. Our scheme achieves significantly higher throughput, up to 79%, in all the tested scenarios, and is robust to packet loss due to collisions, improving the throughput by up to 256% in the presence of hidden stations.