Entering the final race, Michael Schumacher led the Drivers' Championship with 92 points, followed by Damon Hill with 91 points. Williams led the Constructors' Championship with 108 points, while Benetton were 5 points behind with 103.
Schumacher took the lead at the start, with Hill second behind him. The order between the two remained the same until lap 36. Schumacher went off the track at the East Terrace corner, hitting a wall with his right side wheels before pulling back onto the track. Hill had rounded the fifth corner of the track when Schumacher pulled across the track ahead of him to the left. At the next corner, Hill attempted to pass Schumacher; the two collided when Schumacher turned in. Schumacher was eliminated on the spot. Hill attempted to continue the race and pitted immediately, but retired from the race with irreparable damage to the car's front left suspension wishbone. As neither driver scored, Schumacher took the title.
After Schumacher and Hill retired, Nigel Mansell took the lead of the race. Mansell stayed in the lead until he made his second pit stop. After Mansell pitted, Gerhard Berger took the lead and stayed in the lead after his second pit stop. On lap 64, Mansell overtook Berger to retake the lead of the race. Mika Häkkinen was running 5th in the closing stages behind teammate Martin Brundle and Rubens Barrichello until his brakes failed on lap 77, sending him off into the wall backwards into retirement but was classified 12th. Mansell stayed in the lead for the rest of the race to win, with Berger finishing second and Brundle finishing third ahead of Barrichello, Olivier Panis, and Jean Alesi in the other Ferrari completing the top 6.
The collision between Schumacher and Hill was widely discussed. The race stewards judged it as a racing incident and took no action against Schumacher. Schumacher maintained that the collision was a racing incident. Hill later stated that Schumacher drove into him. The incident's legacy persisted; in 2003, the BBC conducted a search for "The Most Unsporting Moment" in which the Adelaide incident was nominated.
The 1994 Australian Grand Prix marked several significant milestones:
Nigel Mansell: This was his 31st and last Grand Prix victory, as well as his last podium finish in his last race for Williams. As of 2024, this is the last time a driver over the age of 40 won a Formula One race.
The race was the final appearance in a Formula One Grand Prix of the first incarnation of Team Lotus, previously seven-time Constructors' Champions.
As of 2024, this was the last Formula One race where the number of entrants exceeded the number of places on the starting grid.
The event was the final Grand Prix for Christian Fittipaldi, Franck Lagorce, Michele Alboreto, Hideki Noda, David Brabham, JJ Lehto, Paul Belmondo and the Larrousse team.
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