I've been having a problem with the overdrive turning off in my 240 Wagon. The orange arrow indicator light will come on, and the car will downshift out of overdrive. Sometimes, if I hit the dash, the problem fixes itself. (Hitting stuff DOES work, sometimes!) I just brought it to the shop, and had the wire which connects the overdrive button to the transmition replaced. Now the light seems to stay on, where before it was intermittent, and the car is stuck out of overdrive, making highway driving a bit annoying. There are 222,000 miles on her and otherwise runs great... any ideas? OH, there is also a clicking sound which i didnt notice before this all started coming from somewhere in the center of the dash... any help would be greatly appreciated... thanks!

 

I would first check fuse 11, clean it up, swap it out. If that didn't fix it then I would swap out the O/D relay. It's behind the center dash vent.

http://www.fcpgroton.com/volvo240relayswitch.htm

 

I had the same problem. Unscrew the glove box and look left for a white rectangle shaped relay about 2 inches long. Replace that part with another one from a dealer or a U-Pull yard. If you go to a U-Pull yard, you can take a relay from a 740 as well as a 240. The relay just pulls out. These things have a nasty habit of failing after a 150,000 miles or so. Mine went about 220,000km (I use metric system).

If at a U-Pull yard and salvaging the 740 for it's OD relay, it's the white one on the far right. It can be a pain in the butt to get to it