The incident happened at the Red CentreNATS event in Alice Springs on Sunday, with footage taken by spectators showing fuel igniting and flames being thrown over fans from a car skidding in circles.
"Twelve patients are currently being treated at Alice Springs Hospital. One patient is in a critical condition and the remaining 11 are in a serious but stable condition," organisers said in a statement. "This is a distressing situation, however all patients are receiving the care they need."
Witness Chris Dess described "a massive fireball" coming from the back of the car.
He told the Australian Broadcasting Corporation one man was "just standing there in shock, he was charred, and then fell to the ground and you could see skin melting off him".
"We watched another lady who'd come running out of the fireball and her hair was all melted and she was standing there patting it all down," he added.
"We all stood there in a bit of shock, and then we all kicked in trying to help the poor gentleman who was on the ground."
"The crowd was phenomenal," he said. "I said, 'I need some water' and bottles were coming in from everywhere."
Billed as the "Ultimate Festival of Wheels", the event attracts thousands of motoring enthusiasts to central Australia for a weekend of racing and entertainment.
Organisers shut down the event after the incident, with police and fire authorities investigating.
Northern Territory Chief Minister Michael Gunner said that despite the tragedy, he hoped the event would take place again next year.
"We will be doing everything we can to ensure we learn from what had occurred and next year's event is conducted as safely as possible," he told reporters. "I think it's important we don't take knee jerk reactions to this, that we take a deep breath, we look at what has occurred and respond to that."
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.) Click for more trending news
Election Results for Lok Sabha Election 2019 will be out on May 23. Get the latest election news and live updates on ndtv.com/elections. Catch all the action on NDTV Live. Like us on Facebook or follow us on Twitter and Instagram for news updates from each of the 543 parliamentary seats for the election 2019