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LEGACY VENDOR
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Could be the solenoid, I guess, which maybe isn’t switching between the range-change and clutch-actuation modes properly



Or maybe the clutch plates are worn?



The identical Magna Steyr DD295 transfer box is also used in the Range Rover Sport and Discovery 3 & 4 (with possibly more information available on their forums) and so there are plenty of used units about which usually sell on eBay for between £150 & £300. Sometimes the shift motors are removed but, as your transfer box selects high and low ranges okay, it doesn’t sound like the shift motor is at fault.

https://www.rangerovers.net/forum/6...-magna-steyr-dd295-transfer-box-teardown.html

Phil
 
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