I've tracked my '88 S4 quite a bit doing DE's, it's a street car so it's never been raced.
Here's how I approach it:
1) Accept the fact that you are basically going to be driving a two speed manual.
2) Disconnect the kickdown switch.
3) Adjust the vacuum modulator and bowden cable to give you smooth shifts. This is going to be harder on the tranny than the shift kit-like crisp shifts of cranking down the modulator for those that like to leave the tranny in "D" while using a PKS. (Parallel Kickdown Switch). You need a smooth shift for both upshifting and downshifting when you manually shift the gears. A hard shifting A/T, which is fun accelerating in a straight line, will seriously disrupt the balance of the car when accelerating and decelerating in and out of turns.
4) After (and ONLY after) you get used to manually shifting your A/T on the track, you need to work on your left foot braking. You need to time your corners in such a manner that you hit the brake with the left foot, and -optimally- just before you start your turn in the following three things occur: The tach needle sweeps downward past 3500rpms, your downshift to "2", you put just enough pedal pressure on the accelerator to rev match 4500 rpms in "2" (your left foot is still on the brake). So at this point you have your left foot on the brake and your right on the gas. I know it sounds weird but it works. You let off the brake at the same time you turn in, there is a brief window in all this where the tranny is shifting and you can bring the engine rpms up and just as the car downshifts to "2", the engine will be at 4500rpms, which is right in the meat of the power band. It's kind of like a rev match with a manual car, but not quite as elegant. If you ever get a chance to drive a track out in the rain (something of which there is no shortage of here in the PacNW), there is nothing like a slick track to keep you honest in learning this technique. If you downshift too early the rear wheels will lock up and it is not a lot of fun.
This technique will keep your S4 as deep into the brake zones as it can go, and keep it on the pipe coming out of the corners.
Regarding H's comments on the LSD, I would disagree. I would have a hard time racing a car without it, whether it was an A/T or a manual. It is very frustrating going around a corner and losing forward momentum because your sole drive wheel happens to be on the inside in a tight corner and all the weight transfers out causing wheel spin. His scenario is caused by one of two issues, either the tranny being set up to shift too hard, which causes the wheel to lose traction on the shift, or the car is being driving in "D", which would cause the car to upshift automatically to the next gear if the driver lifted after the tail kick out. If the car automatically upshifts to 4th in this situation, you've lost all instant power to the wheels and you've got no control over the rear of the car anymore.
Concerns about tracking an A/T all surround this unpredictability about the tranny downshifting under hard acceleration. By manipulating the bowden cable, vacuum modulator, and disconnecting the kickdown switch, you can eliminate all unpredictability, but at the same time you have changed your A/T into something different than what it is stock. My car is still very docile, but I manually shift it all the time. If I leave my car in "D", it will still upshift and downshift, but not with the same response as a stock S4. In order to upshift I have to lift, in order to downshift I have to floor the gas and wait an extra second or two. This doesn't matter to me because I don't really drive my car in "D", and haven't for a long time. When I manually shift the car I get an instant response, so that's all that matters to me.
If you have it in your head that you are going to be able to set up the A/T to shift for you while leaving it in "D" in a race situation, I think you are taking the chance that the tranny may catch you by surprise sooner or later in a race. At some point, you are going to find yourself side by side with some hot stuff RSR that you are just dying to school, and you'll put it to the floor, activate your kick down, and heaven forbid you also have a PKS wired in, the tranny will do a two gear downshift into first and you'll be looking eye to eye with the oncoming traffic behind you. Not saying that it will happen, I DE'd my s4 with that set up without issue, but the possibility was always there.
Good luck with it though, I'd love to see more A/T's out on the track, they are certainly capable trannies.
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Adam Birnbaum
'88 S4 A/T Schwartz
PacNW 928
Proud Member of 928 Owner's Club