Cooperative communication techniques promise the advantages of MIMO (multi-input multi-output) communications for wireless scenarios with single-antenna terminals. In this paper, we investigate the performance of a vehicle-to-vehicle cooperative scheme where another vehicle in the vicinity of the source vehicle acts as a relay. The underlying source-to-relay, relay-to-destination, and source-to-destination links are modeled as cascaded (double) Rayleigh fading. This statistical model provides a realistic description of inter-vehicular channel where two or more independent Rayleigh fading processes are assumed to be generated by independent groups of scatterers around the two mobile terminals. We derive a pairwise error probability (PEP) expression for the inter-vehicular cooperative scheme under consideration and show that the full distributed spatial diversity is extracted. Based on the derived PEP expressions, we obtain union bounds on the bit error rate performance which are then minimized to optimally allocate power between broadcasting and relaying phases. Optimum power allocation brings performance gains up to 3dB depending on the relay location and deployed modulation scheme.