Allah is the One who made human beings into different groups and people. Note that no word equivalent to race is used in this ayah or any other verse of the Quran. Islam, however, limits the purpose of these distinctions to differentiation and knowing each other. This is not meant to be a source of beating each other down with an attitude of 'my group is better than your group' or false pride as is the case with tribalism, nationalism, colonialism, and racism. The only source of preference or greatness among human beings is not on a national or group level, but it is at the individual level.
Individual piety is the only thing that makes a person better and greater than the other one.
However, the only criterion of preference, Taqwa, is not measurable by human beings. These are the deeply embedded ideals of Islam which still bring people to this way of life even though Muslims are not on the best level of Iman today. This is what changed the heart of a racist Malcolm X when he performed Hajj in Makkah. This is the power that brought Muhammad Ali to Islam. This is what still attracts the Untouchables of India towards Islam .