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That's the OD warning light,

Check wiring, relay, Solenoid, and switch

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Q: On a 1991 Volvo What causes the transmission arrow to blink on the dashboard?
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What is up arrow on dash of 850 Volvo?

If its an automatic then your either in winter or a low gear(not flashing) or transmission fault(flashing arrow) But if its manual the non flashing arrow is the recommended time to up shift.


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