The transfer case encoder is an assembly which houses four separate channels. These channels are used to indicate to the transfer case shift control module the present gear position of the transfer case or if the transfer case is in transition between gears. The encoder assembly consists of an electronically conductive inner ground ring in contact with a three legged wiper arm. Each leg's length is such that it makes contact with the conductive regions of the four channels. When any leg of the wiper arm is making contact with conductive area of any channel, the encoder provides a path to ground to the inner ground ring.

During electronic shifting, the transfer case shift control module monitors the transfer case encoder circuit for the proper operating sequence. If at any time during a shift, the encoder changes from one position to any position other than the next possible position, an error counter in the transfer case shift control module increments by four. After the counter reaches 32, the transfer case shift control module set a DTC 2, a permanent "encoder fault," and reverts to a 2HI to 4LO or a 4LO to 2HI shift pattern only. To guard against a transient, random encoder fault due to vibration, dirt, electrical noise, etc., the fault counter reduces by one each time the transfer case shift control module detects a valid encoder value. The encoder must intermittantly fail 25 percent of the time for the transfer case shift control module to consider it faulty and store DTC 2.

The condition for setting the DTC is no longer present and a momentary loss of battery power at the battery positive voltage circuit.

The numbers below refer to the step numbers on the diagnostic table.

2. This step measures the voltage between the transfer case encoder circuit channels P, A, B, and C to ground.

3. This step tests the suspect circuit(s) for an open, short to power, or short to ground.

4. This step tests the encoder signal ground circuit for an open or high resistance.