"98 subaru legacy outback (automatic) We had the engine rebuilt 5/07. After a while the rear wheels starting grabbing (when turning in a tight radius) and has gotten to the point of digging up our gravel driveway. The same mechanic says he can rebuild the “clutch pack” for $800. The dealer says “what, a clutch pack?” and is recommending a new Transmission for $2500. What’s a clutch pack?
Here is a link to a site that may help you understand the way the system works.
http://www.subaruspecialists.com/mainframe/AllWheelDrive.html
Fix the clutch pack. The car is 10 year old and this repair will likely last the life of the car if the transmission had maintenance done to it.
The dealer doesn’t probably calls it a transfer clutch and is playing dumb. The transfer valve and clutch pack are normal wear items in Subaru automatics. The $800 price is about right. I paid just about that much a few years ago when mine was replaced. No more binding wheels.
The only problem is this: if you delay (or have delayed) too long, there could be internal damage to the transmission. We will all hope that is not the case, and all you need is a new transfer valve and clutch pack.