Hello, I’m new here and new to MB and diesel motors as well.
I have just purchased a 1978 W123 300D 2 days ago and currently trying to figure out this problem with the transmission. The transmission will not shift into the next gear at all unless I let off the accelerator. I can’t cruise at 35mph because it can’t decide if it wants to stay in gear or downshift. It downshifts very smoothly however.
The transmission does not use vacuum, and it does not have a VCV valve.

Mine does that but only on the 3-4 shift...

I just deal with it but then again, it's only the last shift.

I'm sure it's a matter of adjusting rod that connects the throttle linkage to the trans.

I think if you shorten the link rod the trans will shift later.

So in your case you would need to lengthen the rod.

It's just an opinion, but's it's something to try.

This is correct as a second step. The linkage rod is called the "Control Pressure Rod". Longer rod = earlier shift.
The first step is to ensure that the kick-down (KD) switch or KD solenoid is not continuously engaged. Remove all carpeting in the footwell, and clean around the KD switch under the throttle pedal. Pressing down on the KD switch & releasing should result in audible clicks. If the switch seems OK check for power at the KD solenoid on the right front corner of the trans, just above the edge of the pan. With the key ON there should not be power at the solenoid until the KD switch is closed.

I had a ‘78 300cd. These motors like to be wound out between shifts. Whenever someone else would drive the car they would alway be timid of the revs between shifts.

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Current fleet
2006 E320 CDI
1992 300D - 5speed manual swapped

former members
1984 300D "Blues Mobile"

1978 300CD "El Toro"