In recent years, electric propulsion systems have increasingly been used in land, sea and air vehicles. The vehicular power systems are usually loaded with tightly regulated power electronic converters which tend to draw constant power. Since the constant power loads (CPLs) impose negative incremental resistance characteristics on the feeder system, they pose a potential threat to the stability of vehicular power systems. This effect becomes more significant in the presence of distribution lines between source and load in large vehicular power systems such as electric ships and more electric aircrafts. System transients such as sudden drop of converter side loads or increase of constant power requirement can cause complete system instability. Most of the existing research work focuses on the modeling and stabilization of DC vehicular power systems with CPLs. Only a few solutions are proposed to stabilize AC vehicular power systems with non-negligible distribution lines and CPLs. Therefore, this paper proposes a novel loop cancellation technique to eliminate constant power instability in AC vehicular power systems with a theoretically unbounded system stability region. Analysis is carried out on system stability with the proposed method and simulation results are presented to validate its effectiveness.