I have towed my '52 VW bug (at just under 1700 lbs.) without any real incident with my 88 760T, high miles (as in 300K plus). It's not perfect, at least not as tough as my old '69 Buick wagon was, which could tow my other cars all day faster than they could drive. I'd say that once you go into any boost at all, drop out of OD--meaning that you'll not be using overdrive anywhere except when going down an incline. I found that the coolant temp indicator showed above the mid-point for the first time since I owned the car--it got damn near the red zone while climbing big hills on the Interstate. I subsequently used premium fuel and the temperature stayed down, so when I plan on towing I swallow hard and tank up on the expensive stuff. In addition, I was being cautious, working my way up hills slowly, using the climbing lane, shutting down the a/c at times. So towing with a 4-cylinder Volvo isn't perfect, but with care and patience you'll have no problems.
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Steve--88 765T, 84 764T, 87 744 (RIP), 84 242 (RIP), 52 Volkswagen, 34 Plymouth
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