That many objects shouldn't really be causing such a slowdown, but without seeing what you've done we can only guess.
For example, I just quickly added 500 bullet objects to a Layout and the fps was a constant 60 FPS.
What does debug profiling have to say?
Maybe best to post your .capx for all to to check for you.
Unfortunately the .capx is for my now completed game on the arcade and I don't really want to post the .capx because I worked really hard on it ;~;
Other possibilities is that the hero is a physics object with a linear dampening of 50... World gravity is set to 0, and on W is down, a forward force of 100 is applied, with A and D rotating it. (I wanted it to resemble the car movement)