A common complaint we receive from customers with NP246 late style transfer cases (2003-2007) is that when they shift into 4Hi the indicator light will flash and then the unit will fall out of 4Hi and go back to 4Auto. This is NOT an internal malfunction of the transfer case itself but is an external electronic issue.

The 2003-07 designed NP246 does not have an internal detent system like most earlier model transfer cases have to lock it into a particular shift position. In the late 246 the “locking” of the unit into a desired position is achieved by the encoder shift motor. The encoder motor provides two separate functions. First, it moves the transfer case shift selector into the desired position when commanded to do so by the transfer case control module. Second, it “locks” the transfer case into the selected position with a locking mechanism that is built into the encoder motor.

What is happening when you select 4Hi and the indicator light flashes then the transfer case falls out of 4Hi and reverts to 4Auto is that the encoder motor “lock” function is not working. That is the only thing that will cause this condition. THERE IS NOTHING INTERNAL INSIDE OF THE TRANSFER CASE THAT HOLDS ITSELF IN 4HI THEREFORE THERE IS NOTHING WRONG WITH THE TRANSFER CASE WHEN IT WILL NOT STAY IN 4HI.

There are several possible external causes for this condition. However, while this condition is electrical in nature it will usually not set any codes. If you hook up a scanner expecting to find some sort of fault code when this situation occurs, you will probably not find any codes. Some of the areas to consider as problems are the encoder motor itself (locking mechanism no longer functioning), the dash switch, the transfer case control module, the wiring that connects these three electric components to each other (past customers have found wires chewed by rodents!), low battery voltage (battery too weak to power the control module properly), and vehicle grounds.

Diagnosing problems on modern electronically controlled vehicles can be difficult. We are here to help in any way we can. Feel free to call us with any questions you may have.

P.S. – A word about encoder motors;

If you feel your encoder motor needs to be replaced please DO NOT buy an aftermarket motor, especially from a manufacturer called Dorman. They are complete junk. We have had customers install up to four Dorman motors before they got one that worked. It is not worth chasing your tail on an electronic issue to save a few dollars. If you are replacing the encoder motor always buy an AC Delco motor from the dealer.