Disclaimer I'm no mechanic and my thoughts below are scattered...take two and call me in the morning...
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I'll probably catch hell from others, as I'm out of my forum (C3's :L), but I manually shift my TH350 all day long. I don't know if having an ECM assisted tranny makes any difference, so I might be completely wrong applying this to a C4.
I think most factory auto transmissions (ATX) are setup for economy. Meaning, it shifts where it thinks it's going to get the best overall mileage (more or less). Or what the demands are of the engine.
Deciding where your car shifts a lot of times depends where your foot is (i.e., how much throttle the car has). If you just put the car in drive and let it start rolling, it will eventually pop into 2nd gear, and maybe even drive. Why? Because there's no load on the drivetrain. If you drive causually, the car will shift later into the RPM range. If you put your foot down, the car will shift at still higher RPMs.
Manually downshifting from D to 2 is no big thing, as long as the difference in RPMs isn't outrageous. Your car does it all the time. I guess what most people don't realize is that 1-2-D on your column are the exact gears that "D" uses. Manually selecting 1 or 2 simply keeps the car in that gear (unless ECM assist doesn't allow that). Again, choosing your gear is no big thing. You can keep the car in 2 as long as you want. If you are burbling around and you jump on the gas, it will probably downshift into 1st. Very little difference than if you manually put it down into first. Like Heidi, I use my lower gears to stop me if I'm coming up on someone a bit hotter than I'd like. Or if I'm racing, let's say through a sweeping corner, I'll put the car in 2nd to keep the engine at it's peak torque. Otherwise, the car will shift into D, then back into 2nd when I throttle it out of the corner. In racing, it's all about keeping your car in it's power band, and that usually isn't when you're in "D". I guess maybe I manually shift because 1) I don't care about mileage. 2) I'm all about keeping the engine at it's peak power. 3) The car sounds so much more vicious at higer RPM's.
Like Heidi said, never neutral drop your ATX. Bad Bad Bad...
SO!
Will manually shifting your ATX wear your tranny & torque convertor more? Probably somewhat. But over the length of your car's and tranny's life, are you gonig to enjoy your car or just burble around town. Everything has a price. But I would say that manually shifting at reasonable RPM's isn't going to destroy your tranny or tq conv after 3 years of driving. (When I say reasonable, I don't mean going from Drive at 2500RPM, and throwing it into 1st, which would be REALLY hard on the drivetrain. Although it will handle it for the most part, the immediate change in RPM puts a major stress on everything. But doing a D to 2 let the RPMs drop some, then down to 1...I do it all the time...(doesn't mean it's right, but it's not wrong either :L)
For the C3'ers out there reading this, manually shift all you want. The TH350 and 400 are good for the beating. C4 folks? I don't know...