Bates received the accolade during the Australian Motor Sport Awards at the Docklands precinct in Melbourne, on December 14.
He joins legendary Brabham Formula One team designer Ron Tauranac and gearbox guru Peter Hollinger as only the third-ever winner of the Phil Irving Award.
"I was stunned when they read out my name," Bates said.
"I was sitting there not really paying full attention before realising they were taking about me when they were describing the winner. I was in shock all night and, even though I do not think I am in the same league as Tauranac and Hollinger, I am incredibly proud to have won.
"The team have had a lot of success in different areas - Targas, endurance events, rallies - so on reflection we have done some pretty good things."
The award is the culmination of what has been a trophy-laden season for Bates and his TRD rally crew.
Simon Evans secured back-to-back Australian Rally Championship (ARC) titles in his Bates-engineered and developed Group N (P) Corolla, while Toyota scored its second manufacturers' title in a row.
Bates spent the 2007 season developing TRD's new Super 2000-spec Corolla and remarkably finished second overall behind team-mate Evans.
He also secured the first-ever ARC stage win and podium for an S2000 car.
Bates' achievements in 2007 have added significance as, on top of running a Group N (P) Corolla for Simon Evans, his team also built and developed the S2000 car he drove, plus an S2000 development car early in the season and a tarmac rally-spec TRD Aurion for the 2008 Targa Tasmania.
The former Targa winner was assisted in his engineering feats this year, as he has for a number of years, by team manager Darryl Bush and senior team members Brian Dunbar, Jeff Forshaw and Graeme Gambold.
"Even though I have been honoured individually, the award is all about the guys that work for me - they are the ones that make it all happen," Bates said.
"There are a lot of smart guys at Team TRD. The cars we produce are prepared and built well, and in motorsport that is the one area that matters.
"It is our job and we just do what we have to, but it is moments like this that we sit back and take in what we have achieved over the years."
The team at Neal Bates Motorsport engineered and ran the Celica GT-Four world rally car that took Bates to three consecutive national titles, and also the WRC Corolla which Bates campaigned from 1997 to 2001.
Bates' team has also built and developed Celica and Corolla production cars in recent years that have raced tarmac events both internationally and domestically.
Perhaps the team's greatest achievement has been the design, construction and development of the Group N (P) Corolla that has won two ARC drivers' titles, helped Toyota win two manufacturers' titles and secured 11 overall wins.
"The engineering of the Group N (P) Corolla that has proven to be a strong, reliable rally car and the development of the S2000 Corolla have been the highlights for me," Bates said.
"Also, the active centre differential we developed and manufactured for the Group N (P) has been an engineering highpoint for the team."
The Phil Irving Award is named after the late, highly regarded Australian motorcycle engineer, whose efforts had an impact on the world scene from the 1930s.
The Confederation of Australian Motor Sport states the award recognises outstanding achievement by individual Australian engineers devoted to serving competitive motor sport.
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