Peugeot 108 Transmission Sensor Issue

Sounds like a bad sensor, alright. The emergency mode and rough shifting are classic symptoms. A low oil level can definitely impact the sensor reading. The sensor monitors the oil's temperature; if there isn't enough oil, it might overheat or the sensor might not read correctly. Have you checked the gearbox oil level? That's the first thing I'd do. It's a fairly simple check.

Thanks for the quick reply! I haven't checked the gearbox oil level yet, mostly because I'm not 100% sure where to find the fill point on this model. Is it easily accessible, or am I going to need ramps and a bunch of tools? Any tips on how to actually do it once I locate it?

Okay, so, on your 108, the fill plug is a bit awkward. You'll likely need to get the car level – ramps are your friend here. It's usually a hex or Torx head. The fill level is correct when oil just starts to dribble out of the fill hole. Given the symptoms, and the fact you're not entirely comfortable doing it yourself, I'd strongly suggest a garage checks it out. Could save you a bigger headache down the line, especially with those grinding noises. It's likely the sensor, but better safe than sorry.

Appreciate the advice! Took it to the shop, and you were spot on. Turns out the gearbox oil was indeed low, triggering the sensor issue. They topped it off, replaced the faulty temperature sensor, and all the shifting problems are gone. The final bill came to 365€, which isn't too bad, all things considered. Thanks again for pointing me in the right direction!