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I have the same problem w/ my '95. After the transmission gets hot either from a run down the freeway or a short sprint up a hill in low gear I can feel it sort of stick as it downshifts when coming to a stop. When starting up it feels just like its in the winter mode but in my car there is no light coming on either on the dash or the switch. After a few seconds of crawling along it then suddenly!!! jumps down into low gear and shifts up normally. This always happens once or maybe twice and then the sticking downshift goes away and it starts up fine. I have resisted replacing the PNP switch because it appears to be heat related and I'm not convinced it's the switch. A local Volvo mechanic has checked the fault codes and found a "winter mode" code which was cleared but the problem did not go away. Be sure to have the tranny fluid checked for signs of burning. Dark color funny smell. If you do buy the car a tranny fluid flush and switch to synthetic fluid will probably help but it may not be the cure. I have changed fluid but not done the synthetic flush although many people on "brickboard" swear by it. That's probably my next step. Look at this car closely, mine has been this way for over a year. Look's like the previous owner has spent alot of relatively(?) inexpensive effort trying to resolve the problem. I just don't want to believe I'm looking at a 2+ grand tranny replacement.
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