I am having a shifting problem on my 1989 300CE with the 722.358 transmission.

The car has approximately 140,000 km (85,000 miles). The transmission has been serviced regularly about every 30-40,000 km with conventional Dexron III and OE filter.

The problem is that after driving about 30-40 minutes of driving, it will downshift very hard into 2nd gear from 3rd gear, like when coasting or slowing to come to a stop. Also, if I slow to go around a corner, and then start to accelerate, the transmission will flair, where the engine revs up before firmly shifting into 3rd gear. I can avoid the hard shifting if I manually shift the transmission into 2nd or 3rd gear.

I replaced the transmission modulator, the fluid (including draining the torque converter) as well as the filter. It is still shifting hard, so I am wondering what things I should check for next. The fluid is at the correct level and was in good condition when I drained it.

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1989 300CE