Use two-wheel drive mode for ideal road conditions. Using automatic mode in loose sand or mud may damage the transfer case. This could happen because the control module constantly shifts in and out of four-wheel drive mode as wheel speeds vary. The correct driving mode for these conditions is four-wheel high or low range. The transfer case then stays in that range.
Automatic mode is best for driving where road conditions vary.
Slippery intersections, icy spots, gravel patches, or occasional muddy holes on country roads are perfect places for automatic four-wheel drive.