Super Mario Kart came out when I was 10, and my brother was 6. There was no hand-holding in that game, and it was very enjoyable for both of us, and he became quite adept at it. Unless they're targetting the game at children younger than 6, I don't see why they would need to dumb down the AI.
As an example, I was playing Mario Kart Wii with my sister-in-law's nephew who is 10. He self-reported as having played this game constantly, and considered himself very good at it. He wanted someone to play with him, and I handily beat him, having only ever casually played the game prevoiusly. On the other hand, I have my original copy of Super Mario Kart, and there is no way I can get anywhere close to my best times now in time trial mode, than I did when I was 10 and played constantly.
My point is that there is no motivation to improve, and it's producing mediocre gamers. This particular child also enjoys the Lego series of games, which also doesn't penalize failure.