Well, it seems to be a slip, but the car doesn't do it under heavy acceleration or up hills, so that tells me otherwise? Here's a video of the car acting up. Any help would be appreciated!

 

Few things before you go to mechanic

1. Check the transmission fluid condition.
2. Does it happen while cold start and driving ..if yes then it might be your valve body need to be change...if it slip while fluid is hot then you clutch plates gone bad....

besides all, if your fluid is not very bad then you can try by changing the filter and oil (Full fluid change which requires professional and 15 liters of oil). OR Transmission software update from the Volvo dealer (very less chance).

Serious caution: If you fluid is really dark brown and has slits then do not change the oil..you may end up with change the whole tranny. good luck.

 

I couldn't help but notice that your tranny did not downshift, "freewheeled", until you hit 1st gear on the deceleration.
I had the same issue.
You're not going to like it...
Replace the tranny...
I had the same issue. When using the manual shift, when in 4th gear, downshift to 3rd. The engine picks up and you can compression brake. 3rd to 2nd, nothing. The engine returns to idle, and you simply coast. 2nd to 1st, you resume compression braking.
I thought it was the valve body in the tranny. Nope- I got a used tranny installed for about $2200. Fine so far.

Good luck.
Bob

 

Thanks guys, Sorry for the late response. I did some further investigation and bobmac010-you were right. I'm just going to get a used trans from a junkyard and slam it in there. I'll probably try the manual shifting thing just for grins though.