I currently have 8 A.I vehicles using the physics engine. In total that's 4 wheels x 8 and 1 chassis x 8, which equals 40 active physics objects. This runs at 80 - 90 FPS with just one vehicle and the environment in view(remember all the other karts are racing). My computer has 2GB of ram with 3.0ghz and a Radeon 9800 graphics card. Of course there is thousands of lines of code running on top of this so I cannot give you an estimate of what it would be like with just the barebone vehicles racing(quite a bit better I'd imagine).
Anyways, all i'm saying is its possible to have at least 8 racers. If your going commercial then give the option for 4, 6, or 8 racers in your grand-prix mode and all should be good. Personally, I like racing against 6 vehicles. Also, the framerate increases to 120-130FPS.
Ello has a good idea, but if your using pretty closed circuts(and the vehicles you see vary quickly) theres a possibility for huge slowdown with all the enabling/disabling code. Also, it wouldn't help the playing experience if you seen the A.I kart land a jump like it's floating on air(considering your timing is off for enabling them back in the physics engine).

Watch these variables:

PH_FPS_MAX_LOCK = 70;
PH_CHECK_DISTANCE = 20;
ph_setautodisable(100,100,100,100); // turn off
time_smooth=0;//dont set at "1", bug with physics engine

They make a huge difference on your performance. PH_FPS_MAX_LOCK when set higher can slow things down alot with multiple vehicles. When PH_CHECK_DISTANCE is lower it will slow down the performance. Do some testing, see what works for you in the balance of performance/stability. I'd reccomend giving the user an option to change the simulation of the physics in the end as well(for higher end users).

P.S - Incase anyone wants to know for the future. I've found a great way to do spinouts(like in Mario Kart) and whatever else you'd like. Just make your real physics vehicle invisible, reduce it's speed accordingly, then create another model and have it do what you want(while following your invisble vehicle). I know this seems like common sense, but I spent an uneeded amount of time wrestling with the physics engine trying to do spinouts and flip effects. It's quite hard to make something in the physics engine do the same thing each time(if not impossible) for an arcade racers spinouts.