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The PNP, gear position switch, has nothing to do with the internal workings of the tranny. Probably what the mechanic was refering to was the problem if the PNP fails completely, the tranny may go into "limp home" mode. That keeps the car in 3rd gear and lots of slippling will occure, which heats up the fluid.
You have a warning that the PNP switch is getting dirty and the contacts are no longer precise, so the PNP switch will need to be replaced soon.
Klaus
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1975 164E running? 1995 854T sweet 1998 V70 R work horse
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