VW Tiptronic Transmission Problems

Though it is known by some as VW's "flappy-paddle" gearbox, the Tiptronic is actually a very advanced and reliable transmission. First introduced by Porsche, the Tiptronic is not an electronically activated manual transmission, as one might find in some higher-end applications. It is an automatic transmission specifically designed to be manually shifted with either the wheel mounted paddles or standard sequential shifter.
History
The Tiptronic was designed by Porsche as a viable alternative to the standard manual transmission that was the only option traditionally available. Blasted by purists as the "Poser's Porsche," these transmissions have become very popular in recent years, especially since Formula 1 cars have begun to use a similar paddle-shift arrangement. Porsche licenses this transmission design to several other manufacturers including Land Rover and Porsche's own corporate fuhrer, Volkswagen.
Strengths
As it was originally engineered for much higher powered cars, the Tiptronic is well known as a stout transmission. Its use in practically every Turbo-four application in the VW family is testament to its strength, and many owners modify these cars to send more than 300 horsepower through the stock transmission with little more than a computer re-flash. Its planetary-gear design is as sturdy as it is on any automatic, and the only failures in stock transmissions are generally electrical in nature.
Inherent Weaknesses
One of the few weaknesses inherent to the VW Tiptronic has already been addressed by the company. Early transmissions were subject to hard 1 to 2 up-shifts, erratic 3 to 4 shifting and torque converter shudder. VW released a service bulletin to address this issue, advising owners to re-flash (re-program) the stock transmission computer with more recent software and smoother operation.
N89 Solenoid
In a few known instances, an important solenoid designated "N89" has failed in the Tiptronic. The Tiptronic uses a number of solenoids in different combinations to engage the gears. First and Fourth gear share practically the same solenoid arrangement, except for the # N89. If this solenoid sticks in the 3 to 4 gear change, it is possible to wind up in first gear instead of fourth. This will cause rapid deceleration, like slamming on the brakes, but so far has yet to actually damage a transmission.
Modification
If you are thinking of running 911 power in your Passat, consider upgrading the stock clutches and and torque converter. Since many components of this Tiptronic are shared with VW's Porsche brethren, some may be able to utilize stock Porsche components to upgrade.