McRae was born in Lanark, Scotland, to Jimmy and Margaret McRae. His father, Jimmy McRae, was the five-time winner of the British Rally Championship. Colin was the eldest of three brothers; his middle brother, Alister McRae, is also a rally driver. His maternal uncle Hugh "Shug" Steele was a former rally driver as well. McRae attended Robert Owen Primary School and Lanark Grammar School and studied for a year at Coatbridge College, then worked at Archie's Autos and in his father's plumbing and heating business.
He began competitive motorsport riding trial bikes, becoming the Scottish schoolboy motocross champion at thirteen. At sixteen, through the Coltness Car Club, he obtained a Mini Cooper and started autotesting, then borrowed a Hillman Avenger GT for the Kames Stages, finishing thirteenth overall and first in his class.
In 1986, driving a Talbot Sunbeam, McRae entered the Scottish Rally Championship with Ian Grindrod as co-driver, drawing comparisons to his idol, Finnish ex-World Champion Ari Vatanen. His first WRC event was the 1987 Swedish Rally in a Vauxhall Nova, finishing 36th. He took the Scottish Rally Championship title in 1988 driving a Vauxhall Nova, and in 1989 finished fifth overall at Rally New Zealand in a rear-wheel-drive Sierra Cosworth.
In 1991, McRae turned professional when Prodrive boss David Richards signed him to the Subaru team in the British Rally Championship for approximately £10,000 per year. He won the British title in both 1991 and 1992, then graduated to the Subaru World Rally Team at WRC level. In 1992, McRae made a one-off appearance in the British Touring Car Championship for the Prodrive-run BMW factory team at Knockhill, where he collided with Matt Neal and was disqualified for causing an avoidable collision.
Promoted to the WRC in 1993, McRae drove the Prodrive-built Group A Subaru Legacy alongside Ari Vatanen, Hannu Mikkola and Markku Alén. He won his first WRC rally that year at Rally New Zealand — also the first win for the newly formed Subaru World Rally Team — shortly before the Legacy was replaced by the new Subaru Impreza 555.
In 1995, McRae secured the drivers' title at the season-ending Rally of Great Britain, defeating double champion teammate Carlos Sainz. The rival Toyota-powered Team TTE had been excluded from the championship after the 1995 Rally Catalunya for using an illegal air restrictor. McRae's performances enabled Subaru to win the manufacturers' title three consecutive times in 1995, 1996, and 1997. In both 1996 and 1997, McRae finished second in the standings, on both occasions behind Tommi Mäkinen of Mitsubishi Ralliart. In 1998, his final Subaru season, he won three more rallies, finished third in the championship, and won the Race of Champions in Gran Canaria.
McRae switched to the M-Sport-run Ford factory team for 1999, driving the new Ford Focus rally car on a deal worth six million pounds over two years — at the time the highest earnings for a rally driver in history. He immediately won consecutive events at the Safari Rally and Rally Portugal. Reliability issues with the Focus limited him to sixth in the standings that season.
In 2000, McRae was victorious at Catalunya and Greece and finished fourth overall. He renewed his Ford contract for two further years. In 2001, after failing to score in any of the first four rounds, he scored three consecutive victories in Argentina, Cyprus and Greece to tie with Mäkinen at the top of the points table. However, McRae crashed out of the final round in Great Britain and finished second overall — two points behind Richard Burns of Subaru.
In 2002, McRae's victory at the Safari Rally made him at that point the driver with the most WRC event wins — a record subsequently broken by Carlos Sainz. Ford declined to renew McRae's contract after he reportedly sought wages of five million pounds per year, with Ford's European director of motorsport Martin Whitaker noting that the split was on amicable terms.
For 2003, McRae signed with Citroën alongside Sébastien Loeb and Carlos Sainz. His best result was a second-place debut finish at Monte Carlo, part of a 1–2–3 finish for the team. He finished seventh in the drivers' championship with no victories, but helped Citroën win their first manufacturers' title. Rule changes for 2004 limiting each team to two nominated points-scorers forced Citroën — with Loeb under a multi-year contract and Sainz having outperformed McRae — to release him. McRae was unable to find a WRC drive for 2004, the first time in over ten years he would not be competing in the championship.
McRae also competed across other series. In September 2002 he took part in an ASCAR Racing Series event at Rockingham Motor Speedway, finishing sixth. He rejoined Prodrive for the 2004 24 Hours of Le Mans, finishing third in the GTS class and ninth overall in a Ferrari 550-GTS Maranello, partnering Darren Turner and Rickard Rydell. Le Mans winner Allan McNish commented that "Colin has adapted far better than people expected" to endurance sportscar racing.
McRae debuted at the Dakar Rally with Nissan in January 2004, scoring two stage wins. He returned in 2005, fastest on two of the first three Moroccan stages before crashing out during stage six. In 2004 and 2005, he represented Great Britain in the Race of Champions Nations Cup alongside David Coulthard. In 2005, McRae won the Baja 500 Portalegre.
He drove for Škoda on the 2005 Rally GB and Rally Australia, finishing seventh at the former and retiring from the latter with a clutch problem. On 5 August 2006, McRae competed for Subaru at the first live-televised American rally at the X-Games in Los Angeles, rolling the car on the penultimate corner but finishing with a time only 0.13 seconds slower than winner Travis Pastrana. He made a final rally start as a replacement for Sébastien Loeb at Rally Turkey in September 2006, retiring from seventh place with an alternator problem.
McRae died on 15 September 2007 while piloting his private helicopter, a Eurocopter AS350B2 Squirrel, which crashed one mile north of Lanark, close to the McRae family home. His five-year-old son Johnny, and two family friends — Graeme Duncan and six-year-old Ben Porcelli — also died. McRae was not licensed to fly the aircraft; his flying licence had expired in 2005 and his valid type rating for the helicopter had expired in March 2007.
The Air Accidents Investigation Branch stated it could not positively determine the cause, but concluded it was more likely that the pilot attempted a turning manoeuvre at low height during which the helicopter deviated from its intended flight path. A fatal accident inquiry concluded on 6 September 2011 that McRae was at fault for the crash, with Sheriff Nikola Stewart citing "unnecessary and unsafe" low-level flying and noting McRae was unqualified and untrained to fly at such a level.
The funeral for Colin and Johnny took place on 26 September at Daldowie Crematorium near Glasgow. A "Celebration of Life" service at St Nicholas Church in Lanark on 30 September drew around 700 mourners inside the church with crowds of up to 15,000 outside. Attendees at the funeral included fellow Scottish drivers Jackie Stewart and Dario Franchitti. David Coulthard described McRae as "an understated yet fantastically talented individual" and raced the 2007 Japanese Grand Prix with a helmet livery similar to McRae's as a tribute. Valentino Rossi, who had been taught rally basics by McRae, dedicated his 2007 Portuguese motorcycle Grand Prix win to him.
McRae was appointed a Member of the Order of the British Empire in 1996 for services to motorsport. In November 2008 he was posthumously inducted into the Scottish Sports Hall of Fame. The Swedish Rally organisers created an award named Colin's Crest for the longest jump at the Vargåsen stage; the inaugural winner recorded a distance of 30 m. Kenyan driver McRae Kimathi is named after him.
The Colin McRae Rally video game series, produced by Codemasters, debuted in 1998. Version 2.0 was released in 2000 for PlayStation and Windows, with further entries through 2007 under the Colin McRae name; the final game in the series to bear his moniker was Colin McRae: Dirt 2. In 2003, McRae began designing a rally car called the McRae R4, which he debuted at the Goodwood Festival of Speed in 2007. Built by DJM Race Preparation on a steel safety cage with carbon panelling and featuring a naturally aspirated 2.5-litre Millington Diamond Engine producing 350 BHP, it was intended as an economic alternative to other rally cars with an additional focus on safety.
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