Awhile back, I test drove a 300SD that had this same problem, yet the tranny seemed good otherwise. I didn't buy it, but mostly for other reasons. That car had about 325K on it.

I rebuild GM 700R4's etc. as a hobby, but have not been into a MB 722.3/4 yet. But there are many similarities in operation.

If it is the pressure reg. valve, I think that would lower the line pressure and therefore cause slippage in all gears. Excessive clutch/band slippage = a short trans. life.

Transmissions have lip seals on the various apply pistons that get worn and stiff from age/heat. I suspect that fluid drainback/leakage is causing the delayed engagement. Some fluid leaks out, while not under pressure, and it takes a moment for the pump to fill the circuit/drum back up and build pressure to apply the friction element.

The "bad" news: I think a rebuild would be required to cure this.

The good news: I've heard/read that these trannys can work for a long time like this.

Perhaps an experienced builder of this specific transmission will post .

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Diesel-guy