Peugeot 108 Transfer Case Defect

Good day. Gear grinding and unclean shifts in your Peugeot 108 suggest potential mechanical wear. The symptoms you describe, combined with the reported transfer case oil wear fault, are indicative. Has there been any noticeable oil leakage in the area of the transfer case?

Oil leakage... hadn't specifically checked for leakage, just the level which seemed ok-ish. But now you mention it, where exactly should I be looking around the transfer case? And what sort of oil level drop are we talking before it gets critical?

Given the mileage and symptoms you report, internal wear within the transfer case is highly probable. While visually inspecting for oil seepage around the transfer case seals and housing is advisable, the absence of noticeable leakage does not exclude internal damage. I strongly advise seeking a qualified mechanic for a thorough inspection. Continuing to drive in this condition may exacerbate the problem.

Roger that. Bit the bullet and took it to a shop. Yup, defective gears in the transfer case, just like you suspected. Cost me 330€ for the repair. Thanks for the heads-up!