Although Dexron III is called out as the proper fluid for the transfer case, GM has deprecated Dexron III and replaced it with Dexron VI. ( a synthetic transmission fluid originally thought to be completely backward compatible for all uses).
Why not just use Dexron VI?
Dexron VI has been found unsatisfactory for use in some transfer cases, and has led to or caused hardware failures. Our research indicates that GM owns the rights to the specifications and licensing of manufacture of Dexron III. In 2005, GM released the new 6 speed transmission and Dexron VI as a synthetic fluid approved for it. In 2006, GM discontinued licensing manufacture of Dexron III fluid. This means that no one can technically make Dexron III compliant fluid because it existed only at GM’s permission.
Although Dexron VI was originally assumed to be backwards compatible, it was soon discovered that both manual transmissions and transfer cases were failing at an unexpected rate. Because of this, GM released a “new” fluid for manual transmissions and transfer cases that is essentially a fluid manufactured to GM Dexron III specification.
As the majority of HMMWVs in use (at least by the public) predate the 2005 change, it is safe to assume that Dexron VI would not be a suitable substitute. As late as 2007, GM released a PI warning against the use of Dexron VI in 2007 and prior vehicles. #PIP3836B expressly states: DO NOT use Dexron VI in place of the manual transmission fluid in any manual transmissions or transfer cases as a failure may result.
What should be used instead?
Our research indicates GM continues to recommend Manual Transmission Fluid 88861800 in place of Dexron III. From what we can determine, this fluid is merely relabled Dexron III, albeit potentially with some additives.
We have also seen recommendation of GM Fluid 88900402 (Auto Trak II Transfer Case Fluid) as a suitable replacement for Dexron III in transfer cases. We have not, however, been able to find a GM recommendation of this fluid over 88861800.
We have also been advised that Amsoil makes a Dexron III replacement for use in transfer cases, but have no further information. I would love to hear others’ comments on fluid substitution.