I have a 1988 740 N/A with about 160k miles. Transmission is AW 03-70L. About 6 months ago the transmission began to only shift into overdrive after it had warmed up - say 5 to 10 miles of highway driving. Once overdrive begins to work, the shifter mounted switch will change it into and out of overdrive normally. I replaced the overdrive solenoid because I could not hear it clicking when the shifter switch was activated. This did not cure the problem, however the new solenoid does audibly click. The latest wrinkle is that once overdrive begins to work, the shift point has moved from about 45 mph to 55 mph. My two local Volvo guys say the overdrive unit is toast and the trans needs to be rebuilt/replaced. I can get a used trans installed for about $700, but I'd like to know if there's a better solution. Fluid level is good, overdrive relay clicks when it's supposed to. Any help is appreciated.

I also have an 88 740 with same tranny with 240K miles. I had similar problem along with a delayed 2nd to third shift. Went through the relay resolder procedure then replaced the solonoid to no avail. A flush using Mobil 1 synthetic cured both problems immediately. I would do a flush before spending any rebuidl bucks. Most bricksters replace the tranny with a used one rather than rebuild. The AW70 rarely fails so they are cheap and plentiful at the wreckers.

I would flush the transmission first then recheck it. It is surprising what a flush and new fluid (maybe synth?) will do.
Good Luck!
CC