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An overdrive is sometimes a separate unit that fits into the back of a gearbox, as with this Fairey unit. A plate warns to only engage the unit in third and fourth gears.

Overdrive can refer to two different things. An overdrive is a device which was commonly used on rear-wheel drive automobiles to allow the choice of an extra-high overall gear ratio for high speed cruising, thus saving fuel, at the cost of less torque.

It also refers to a combination of gearing inside a transmission or transaxle which results in the output speed being greater than the input speed. In the latter case, "overdrive" does not refer to a physically separate identifiable part/assembly.

Early manual automotive transmissions were limited to three or sometimes four speeds, with only the most sophisticated being five speeds. This left an unfulfilled need for a higher gear ratio for highway cruising, which was filled by the addition of separate overdrive units. However, automotive manual transmissions manufactured since the 1980s tend to include a larger selection of gear ratios than before, the highest of which is usually greater than 1:1. This trend has rendered overdrives a complex and obsolete solution to economy gearing in automobiles, and very few cars are fitted with them today, although they still appear on large trucks, where more gear ratios are always in demand.

Generally speaking, overdrive (OD) is the highest gear in the transmission. Most automatic transmissions have three speeds and overdrive (fourth speed). Overdrive allows the engine to operate at a lower rpm for a given road speed. This allows the vehicle to realize better fuel efficiency, and often quieter operation on the highway. When it is switched on, the transmission can shift into overdrive mode after a certain speed is reached (usually 70+ km/h [45+ mph] depending on the load). When it is off, the transmission shifting is limited to the lower gears. For normal driving conditions, operation of the overdrive should be enabled only if the average speed is above 70 km/h (approx. 43 MPH).

It may be necessary to switch it off if the vehicle is being operated in a mountainous area.

The automatic transmission automatically shifts from OD to third gear when more load is present. When less load is present, it shifts back to OD. Under certain conditions, for example driving uphill or towing a trailer, the transmission may "hunt" between OD and the third gear, shifting back and forth. In this case, switching it off can help the transmission to 'decide'. It may also be advantageous to switch it off if engine braking is desired, for example when driving downhill. The vehicle's owner's manual has information and procedures regarding such situations.

The overdrive consists of an electrically or hydraulically operated epicyclic gear train bolted behind the transmission unit. It can either couple the input driveshaft directly to the output shaft (or propeller shaft) (1:1), or increase the output speed so that it turns faster than the input shaft (1:1 + n). Thus the output shaft may be "overdriven" relative to the input shaft. In newer transmissions, the overdrive speed(s) are typically as a result of combinations of planetary/epicyclic gearsets which are integrated in the transmission. In these cases, there is no separately identifiable "overdrive" unit. A number of such transmissions and transaxles are manufactured by Aisin, for use in vehicles produced by many different manufacturers. In older vehicles, it is sometimes actuated by a knob or button, often incorporated into the gearshift knob, and does not require operation of the clutch. Newer vehicles have electronic overdrive in which the computer automatically adjusts to the conditions of power need and load.

The vast majority of overdrives in European cars were manufactured by an English company called Laycock de Normanville (later GKN Laycock), which is now defunct, though an uprated version of this product is produced in the U.S. by Gear Vendors, and remanufactured in the UK by an ex-Laycock de Normanville employee trading as Overdrive Repair Services. The system was devised by an American, named Captain Edgar de Normanville, through a chance meeting with a Laycock Products Engineer. De Normanville overdrives were found in vehicles manufactured by Ford, British Leyland, Jaguar, Rootes and Volvo to name but a few. Another British company, the former aircraft builder Fairey, built a successful all-mechanical unit for the Land Rover, which is still in production in America today.

The first production vehicle to feature the Laycock system was the 1948 Standard Vanguard Saloon.The first unit to be created was the 'A' type Overdrive, this was fitted to many sports cars during the 1950s. Famous marques including Jaguar, Aston Martin, Ferrari, Austin Healey, Jensen, Bristol, AC and Armstrong Siddeley were amongst the manufacturers to incorporate the overdrive unit into their engine systems. Later the A type Overdrive was to be fitted to the entire range of TR cars.

In 1959, the Laycock Engineering Company introduced the 'D' type Overdrive, and this was fitted to a variety of motor cars including Volvo 120 and 1800s, Sunbeam Alpines and Rapiers, Spitfires and also to early 3-synchro MGBs.

From 1967 the 'LH' type Overdrive was introduced, and this featured in a variety of models, including 4-synchro MGBs, the Ford Zephyr, early Scimitars, TVRs and Gilberns.

The 'J' type Overdrive was introduced in the early 1970s, and was adapted to fit Volvo, Triumph, Vauxhall Opel, American Motors and Chrysler motorcars and Ford Transit vans.

Over a period of 40 years, Laycock Engineering manufactured over three and a half million Overdrive Units, and over one million of these were fitted to Volvo motorcars.

The system features an oil pressure operated device attached to the back of the standard gearbox operating on the gearbox output shaft. Through a system of oil pressure, solenoids and pistons, the overdrive would drop the revs on whatever gears it was used on by a set amount of revs. For instance, the overdrive system applied to a Triumph TR5 operates on 2nd, 3rd and top gear. In each gear, when engaged the overdrive would drop the revs by approximately 450rpm. The advantages this had on fuel consumption is quite marked over long distances.

Using overdrive gearing, the car's engine RPM drops, reducing engine wear and normally saving fuel. One should refer to the car's owner's manual for the proper speed to run at overdrive. However, all engines have a range of peak efficiency; it is possible for the use of overdrive to keep the engine out of this range, thus cutting into any fuel savings from the lower engine speed.

There is some debate on the overall efficiency of overdrive gearing, as it requires more moving parts than direct 1:1 drive, but most will agree that within the transmission, this effect is minimal. The other difficulty can be in the drive shaft rotation speed.

Overall drivetrain reduction comes down to three basic factors: transmission gearing (including overdrive), differential gearing (in the axle), and tire size. The rotation speed problem comes into effect when the differential gearing is high ratio and an overdrive is used to compensate. This may create unpleasant vibrations at high speeds and possible destruction of the driveshaft due to the centrifugal forces or uneven balance.

The driveshaft is usually a hollow metal tube that requires balancing to reduce vibration and contains no internal bracing.

The higher speeds on the driveshaft and related parts can cause heat and wear problems if an overdrive and high differential gearing (or even very small tires) are combined, and create unnecessary friction. This is especially important because the differential gears are bathed in heavy oil and seldom provided with any cooling besides air blowing over the housing.

The impetus is then to minimize overdrive use and provide a higher ratio first gear, which means more gears between the first and the last to keep the engine at its most efficient speed. This is part of the reason that automobiles have been coming with more gears in their transmissions. Also, it is why more than one overdrive gear is seldom seen in a vehicle except in special circumstances.

• "How Automatic Transmissions Work - Overdrive" (with a Flash interactive animation)