Do AI cars "cheat"?

When playing Race Driver: Grid, I've noticed that it can be very hard to completely shake the AI cars, they always seem to be able to catch up somehow. Now I'm far from the greatest driver, so at first I thought this was due to lack of skill on my part, but then I also noticed this happening on long straights (like the Mulsanne Straight in the 24 Hours of Le Mans) where I couldn't possibly be going any faster. Regardless of which car I'm driving, I can see competitors (including those driving the same type of car as me) visibly gaining on me, even if they spun out earlier and simply should not be able to catch up this quickly. And if I don't actively block them, they will eventually overtake me, which means they must have at least 20-30 km/h on me, even on long straights where I'm driving at full tilt in the exact same car.

I've observed a similar effect in Touge events, where the AI drivers seem to be getting much faster times when competing against me, compared to against other AI drivers. The difference can be as high as 30 seconds, e.g. two AI drivers in the quarter final both finish around the 2:30 mark, the winner then races against me and inexplicably finishes around 2:00 like me. It seems completely unrealistic for a driver to have that much variation in his performance. Plus they never seem to do this when racing against another AI driver.

So, does the AI in Grid cheat? Specifically, is the AI drivers' performance somehow scaled to match that of the player, in order to provide more of a challenge? If so, how is this affected by the difficulty setting?

In case it matters, I'm playing on a PC with an Xbox 360 controller, mostly on Normal difficulty.

While I have not played this particular game, your description makes it seem like a textboox example of rubber band AI.

Rubber band AI is an example of dynamic difficulty adjustment - it allows the game to provide a player with a suitable challenge regardless of their skill level, by speeding up opponents behind you and/or slowing down opponents in front. Essentially, it works as though there is a rubber band between you and your opponent; when you're getting far apart, this rubber band exerts more force on both of you to decrease the distance.

It is a very common feature in racing games, particularly those that take place on closed tracks (e.g. Mario Kart), but there are games without it, and the basic principle of dynamically adjusting difficulty exists in other genres too (e.g. Left 4 Dead).

(For further examples, see TV Tropes.)