watch this video. relevant section starts at about 2:50
Mercedes Benz 123 Chassis Center Console Wood and Switch Removal by Kent Bergsma - YouTube

you'll know if the automatic control is working by pressing the small button so that the high and low fan selection are both popped out. the automatic control should vary the fan speed. it will never shut off. it will also vary how much heat comes out of the vent. in using mine, it feels like the farther away the target temperature the hotter the air coming out of the vent. the system is very slow to react, by the way. i dont know if thats how its designed or because its 30 years old.

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1981 NA 300D 310k miles